Japan Nikkei surges 1.43%

Headline indices of the Japan share market closed higher on Monday, 01 April 2019, as positive Chinese factory gauges and signs of progress in Sino-US trade talks supported sentiment. In addition, a depreciation of yen against greenback also bolstered sentiment. Total 32 subsectors out of 33 subsectors of the Tokyo Stock Exchange inclined, with shares in with Oil & Coal Products, Iron & Steel, Metal Products, Nonferrous Metals, and Transportation Equipment issues being notable gainers. At closing bell, the 225-issue Nikkei Stock Average advanced 303.22 points, or 1.43%, at 21,509.03. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 24.17 points, or 1.52%, at 1,615.81.

Investors risk sentiment rose after official data on Sunday showed that factory activity in China, Australia's biggest trade partner, unexpectedly grew for the first time in four months in March, soothing fears of an economic downturn. On Monday, the private-sector Caixin survey showed a similar trend.

 

China's official Purchasing Managers' Index, a measure of factory activity, rose to 50.5 in March from the previous month's contraction and three-year low of 49.2, according to data released by China's National Bureau of Statistics. The growth was likely driven by seasonal factors as factories ramped up production after February's Lunar New Year holidays. Factory output also grew at its fastest pace in six months in March, China's National Bureau of Statistics reported, but export orders shrank for the 10th straight month amid slowing global growth and as collateral damage in the trade spat the United States.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) came in at 50.8 for March. A reading below 50 signals contraction, while a reading above that level indicates expansion. Markit and Caixin said in a joint press release that staffing levels at factories rose in March to mark their first expansion since October 2013. Some firms also hired additional workers to support greater production and new business developments, they added. The Caixin PMI is a private survey focused on smaller businesses and offers a first glimpse into the operating environment.

Wall Street's positive performance on Friday also lent support. Wall Street rose on Friday amid signs of progress in US-China trade talks. Beijing said it would continue to suspend additional tariffs on US vehicles and auto parts after April 1 in a goodwill gesture after Washington delayed tariff hikes on Chinese imports. A delegation led by Vice-Premier Liu He will be in Washington this week for another round of talks

CURRENCY NEWS: The Japanese yen, widely viewed as a safe-haven currency, depreciated against the dollar on Monday, amid optimism about U.S.-China trade talks. Data showing that China's factory activity in March unexpectedly grew for the first time in fourth months also boosted sentiment. The dollar stood at 111.13 yen, rising from 110.83 yen in New York late Friday.

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