Japan Nikkei spurts on upbeat offshore lead

The Japan share market advanced on Wednesday, 19 June 2019, following Wall Street's rally overnight on signs that US-China trade relations could be improving after US President Donald Trump told reporters that talks between the United States and China would start on Wednesday. Meanwhile, buying sentiments were underpinned by the possibility that the European Central Bank could inject the eurozone with an economic stimulus, along with expectations for an eventual interest rate cut by the US Federal Reserve. All 33 subsectors of the Topix's advanced, with mining, securities house and marine transportation-linked issues being notable gainers. At closing bell, the 225-issue Nikkei Stock Average advanced 1.75%, or 367.51 points, to 21,340.22, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange rose 1.67%, or 25.50 points, at 1,554.17.

The US share market climbed on Tuesday after U.S. President Donald Trump said in a tweet he had a very good telephone conversation with Chinese President Xi Jinping, with a meeting between the two set to happen next week. The Dow Jones Industrial Average soared 353.01 points to 26,465.54 and the S&P 500 advanced 1% to 2,917.75. The Nasdaq Composite rose 1.4% to 7,953.88.

 

U.S. President Donald Trump tweeted that he had "very good" talks with China's President Xi Jinping and that the two leaders would have an "extended meeting" at the G20 summit in Japan later this month. The summit will start on June 28. A short time later, Xi echoed Trump's upbeat tone, saying that China and the United States should push for "positive outcomes" at the summit of world leaders, in order "to inject confidence and vitality into the global market."

Trade tensions between the two economic powerhouses had worsened in recent weeks with both raising tariffs on billions of dollars worth of their goods. Trump had also previously suggested that additional levies could be imposed on more Chinese imports.

Meanwhile, the U.S. Federal Reserve kicked off a two-day monetary policy meeting on Tuesday. The Fed is widely expected to leave interest rates unchanged at this meeting, though investors will be watching out for hints on rate cuts later in the year. Expectations for a rate cut have increased in recent weeks, amid data on slowing jobs growth and manufacturing activity, as well as concerns over the impact of Washington's protracted trade fight with Beijing on the global economy.

Furthermore, Mario Draghi, president of the European Central Bank, indicated there could be more stimulus measures in Europe.

At the two-day meeting that ends on Thursday, the Bank of Japan is expected to keep monetary policy steady but signal its readiness to ramp up stimulus if growing overseas risks threaten the economy's modest expansion. Weak economic growth could prompt Prime Minister Shinzo Abe to postpone a planned sales tax hike to 10% for the third time. The previous sales tax hike to 8%, from 5%, in 2014 hit consumption and was blamed for a slump in the Japanese economy.

Apple supplier Japan Display saw its stock surge 12.7% following a reports that said Apple may help the display maker.

ECONOMIC NEWS- Japan merchandise trade deficit came in at 967.1 billion yen in May, the Ministry of Finance said on Wednesday, up 67.5% on year, following the 110.9 billion yen deficit in April. Exports were down 7.8% on year to 5.835 trillion yen. Imports sank an annual 1.5% to 6.802 trillion yen after soaring 6.5% a month earlier.Trade data showed exports to China, Japan's biggest trading partner, fell almost 10% year-over-year. Exports to all of Asia fell 12%. However, exports to the U.S. rose 3%.

CURRENCY NEWS: Japanese yen marginally appreciated against greenback on Wednesday. The Japanese yen traded at 108.35 against the dollar after a volatile session on Tuesday which saw it swinging between levels below 108.2 and above 108.6.

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