Japan Nikkei surges on hopes for eased US-China tension

Headline indices of the Japan share market advanced on Friday, 18 January 2019, as appetite buying for risk assets underpinned on tracking firm lead from Wall Street overnight amid optimism for progress in U.S.-China trade talks after reports that the U.S. is considering lifting tariffs levied against China in order to hasten a deal that would end a trade war between the world's two largest economies. All 33 subindexes of the Tokyo Stock Exchange's were in positive territory, with shares in Marine Transportation, Construction, Real Estate, Fishery, Agriculture & Forestry, Pharmaceutical, and Nonferrous Metals issues being notable gainers. In late afternoon trade, the 225-issue Nikkei index added 251.79 points, or 1.2%, at 20,654.06. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 16.50 points, or 1.1%, to 1,559.70.

Risk appetite buying in the Tokyo market today bolstered as investors reacted to a report that said American officials were weighing the possibility of easing tariffs on China, in a bid to push forward trade talks. As per reports, U.S. Treasury Secretary Steven Mnuchin proposed lifting all or some of the tariffs on Chinese imports to give Beijing a reason to make deeper concessions in ongoing trade talks between the two countries.

 

Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the latest round of trade talks aimed at resolving the bitter dispute between the world's two largest economies. In December 2018, Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

Indicators released recently have shown signs that the Chinese economy is losing some momentum. China's fourth-quarter economic growth, due to be reported on Monday, likely slowed to the weakest pace since the global financial crisis, as demand faltered at home and abroad.

ECONOMIC NEWS: Japan overall consumer prices were up 0.3% on year in December, the Ministry of Internal Affairs and Communications said on Friday, down from 0.8% in November. Core consumer prices - which exclude volatiles prices of food - were up an annual 0.7%. That was down from 0.9% in the previous month. On a monthly basis, overall inflation was down 0.2% and core CPI eased 0.1%.

CURRENCY NEWS: The greenback was steady at 109.14 yen after popping up to a two-week high of 109.40 overnight. The dollar has gained about 0.6% against the Japanese currency this week.

OFFSHORE MARKET: US share market closed higher on Thursday, following a Wall Street Journal report that said US Treasury Secretary Steven Mnuchin is discussing lifting some or all tariffs imposed on Chinese imports. Also giving US stocks a boost was the defence sector, led by defence contractors Lockheed Martin and Northrop Grumman, after US President Donald Trump unveiled a revamped US missile defence strategy. The Dow Jones Industrial Average jumped 162.94 points, or 0.67%, to 24,370.10. The S&P 500 was up 19.86 points, or 0.76%, to 2,635.96. The Nasdaq Composite Index rose 49.77 points, or 0.71%, to 7,084.46.

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