Japan Nikkei trades nudge higher

Headline indices of the Japan share market marginally advanced on Thursday, 22 August 2019, as risk sentiments bolstered by gains overnight in Wall Street on a dovish signal from the Federal Reserve. However, market gains were limited after preliminary business survey data showed manufacturing activity in the country shrank for a fourth straight month in August. Around late afternoon, the 225-issue Nikkei Stock Average rose 29.30 points, or 0.14%, to 20,647.87, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 0.31 point, or 0.02%, at 1,497.82.

Total 15 sub-indexes out of 33 sub-indexes of Topix index industry category retreated into positive territory, with Rubber Products, Chemicals, Fishery, Agriculture & Forestry, Glass & Ceramics Products, and Transportation Equipment issues being notable gainers, while Mining, Iron & Steel, Oil & Coal Products, and Pulp & Paper issues were notable losers.

U.S. stocks closed higher on Wednesday, as dovish signal from the Federal Reserve and strong quarterly results from retailers such as Target and Lowe's lifted investor sentiment. The Dow Jones Industrial Average closed 240.29 points higher, or 0.9%, at 26,202.73. The S&P 500 gained 0.8% to close at 2,924.43. The Nasdaq Composite jumped 0.9% to 8,020.21.

The Federal Reserve's meeting minutes showed the Fed has no "pre-set course" for cutting rates. The Fed cut rates by 25 basis points in July, while signaling that it was only a "midcycle adjustment" and the central bank was not returning to the stimulus era.

Market participants remain keenly focused on this weekend's Economic Symposium in Jackson Hole after the Federal Reserve released the July FOMC Minutes that continue the dovish tone which started to grip the central bank earlier this year.

Manufacturing shares in Japan traded mixed after preliminary business survey showed Japanese manufacturing activity shrank for a fourth straight month in August. Komatsu shares rose 0.9% and Kawasaki Heavy Industries added 0.6%, while Mitsubishi Heavy was down 0.1%. Electronics manufacturer Sony dropped 1.8%, Renesas Electronics fell 1.7% and Fujitsu dropped 1.6%.

ECONOMIC NEWS: The Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 49.5 from a final 49.4 in the previous month, but stayed below the 50.0 threshold that separates contraction from expansion for a fourth month.

A separate survey showed Japanese service activity expanded. The Jibun Bank Flash Japan Services PMI climbed to 53.4 in August, from a final 51.8 in July on a seasonally adjusted basis. The Jibun Bank Flash Japan Composite PMI index that includes both manufacturing and services advanced to 51.7 from 50.6 the previous month.

CURRENCY NEWS: The yen, a gauge of risk sentiment due to its perceived status as a safe haven, appreciated on Thursday. The Japanese yen traded at 106.46 against the dollar, stronger than a previous level around 106.64.

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