Japan Stocks mixed on strong yen, ahead of US-China trade talks

Japan share market were mixed on Tuesday, 21 August 2018, as the greenback fell below the psychologically-significant 110 yen level and on caution before two days of trade talks due to start later on Tuesday between the world's two largest economies offset positive lead from Wall Street overnight. Total 17 issues out of 33 TSE index declined, while remaining 16 issues were higher, with shares of Nonferrous Metals, Insurance, Rubber Products, Wholesale Trade, and Services issues being notable losers, while Iron & Steel, Pharmaceutical, Securities & Commodities Futures, Precision Instruments, and Pulp & Paper issues were notable gainers. In late afternoon trade, the benchmark Nikkei 225 index rose 0.25%, or 55.92 points, to 22,254.92. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 0.11%, or 1.81 points, to 1,690.34.

Many market participants are awaiting developments in the lower-level trade talks between the United States and China due to start later on Tuesday. As per reports, the talks in Washington would take place on August 21 and 22, just before $16 billion in new US tariffs on Chinese goods take effect, along with an equal amount of retaliatory tariffs from Beijing.

US President Donald Trump accused China and Europe of manipulating their currencies and said he was "not thrilled" with the Federal Reserve for hiking interest rates. Keeping global trade conflict concerns on the boil, Trump said in an interview with media on Monday that China was manipulating the yuan to make up for having to pay tariffs imposed by Washington on some imports from China. He also said he believed the euro was being manipulated.

Shares of major exporters dropped due to stronger yen against basket of major currencies. Shares of Sony, Panasonic, Mitsubishi Electric and Canon were down in a range of 0.5% to 2%. In the auto space, Honda and Toyota were down in a range of 0.4% to 1%.

CURRENCY NEWS: The Japanese yen appreciated to upper 109 yen zone against U.S. dollar and a basket of major peers on Tuesday, ahead of anticipated talks this week between China and the United States and as U.S. President Donald Trump criticism of Federal Reserve Chairman Jerome Powell for raising interest rates. The yen rose 0.18 percent to 109.87 yen against greenback. The dollar on Tuesday fell below the psychologically-significant 110 yen level for the first time since June 28.

OFFSHORE MARKET NEWS, US stock market closed higher for a third session on Monday, as a pair of billion-dollar deals reaffirmed confidence that the U.S. economy continues its steady expansion. Optimism that progress would be made toward resolving contentious trade disputes between the U.S. and China also bolstered sentiment. The Dow Jones Industrial Average advanced 89.37 points or 0.35% to 25,758.69, the Nasdaq gained 4.68 points or 0.06% to 7,821.01 and the S&P 500 picked up 6.92 points or 0.24% to end at 2,857.05.

The major European markets ended firmly in positive territory on Monday. The DAX of Germany climbed 0.99%, the CAC of France rose 0.65% and the FTSE 100 of the U.K. gained 0.43%.

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