Japan Nikkei gains on renewed trade deal optimism

The Japan share market finished session higher on Thursday, 05 December 2019, as investors chased for bargain hunting after US stocks rallied overnight on renewed optimism about a potential trade deal after reports indicated the U.S. and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal. At closing bell, the 225-issue Nikkei Stock Average advanced 164.86 points, or 0.71%, to 23,300.09, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange grew 8.14 points, or 0.48%, at 1,711.41.

Total 27 issues of the 33 industry category of Topix index inclined into positive territory, with Iron & Steel, Marine Transportation, Glass & Ceramics Products, Metal Products, and Mining issues being notable gainers, while Fishery, Agriculture & Forestry, Services, and Land Transportation issues were notable losers.

 

The market risk-on mood was fuelled by hint of progress about talks between the world's largest economies. The latest reports indicated that negotiators may be closers to an agreement on tariff relief measures that would be part of a phase one deal between the US and China and that such a deal could even happen before additional US tariffs on Chinese goods kick in on Dec. 15. The report came a day after US President Donald Trump said he wouldn't mind waiting until after the November 2020 elections for a deal.

Beyond China, US President Donald Trump has been pushing ahead on trade disputes all around the world recently. On Tuesday, he proposed tariffs on $2.4 billion in French products in retaliation for a tax on global tech giants including Google, Amazon and Facebook. That follows a threat Monday to raise tariffs on steel and aluminum from Argentina and Brazil. The trade war has hurt manufacturers and weighed on economic growth around the world. Central banks have cut interest rates and unloaded stimulus to help spur growth.

Shares of major electronics manufacturers were higher, with Panasonic up 1.4% and Sony up 0.8%.

Oil-linked shares and commodities were also higher reflecting a rebound in global stocks, with Japan Petroleum Exploration up 3.3%, crude oil developer and distributor Inpex up 2.2%, and Sumitomo Metal Mining up 1.5%.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, little softer against greenback, as positive signs about the trade dispute hurt demand for safe-haven currencies. The Japanese yen traded at 108.85 against the dollar after weakening from levels below 108.5 yesterday.

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