Japan's Nikkei advanced to fresh eight-month highs led by an upbeat Wall Street performance, with commodity stocks rising as investors appeared to gravitate to the view that the US-China trade row would be less damaging to growth than first feared.
The Nikkei share average gained 0.8 per cent to 23,864.04 in midmorning trade, the highest level since January 24. The market eyes another milestone ahead, as the Nikkei edges closer to the 24,129.34 hit on January 23, a break of which will put it at the highest point since November 1991. For the week, the Nikkei has risen 3.1 per cent so far.
Market analysts attributed the Nikkei's recent gains to market views that the impact of the Sino-US trade war would be less harmful to global growth than initially feared. Earlier this week, China added $60 billion of US products to its import tariff list to hit back at US duties on $200 billion of Chinese goods that go into effect from September 24.
“The market is focused more on the strong US economy and inflation expectations and is less worried about the impact from US-China trade conflict,” said Naoki Fujiwara, a fund manager at Shinkin Asset Management.
He said investors are also looking ahead to the second round of trade talks between Japan and the US scheduled on September 24.
“If the US says something provocative, it could dent the market temporarily but right now investors think the market will likely take this event in stride,” Fujiwara said.
Japanese Economy Minister Toshimitsu Motegi said on Friday that his meeting with US Trade Representative Robert Lighthizer will follow the one in August, where the two sides failed to narrow differences on whether to open up negotiations for a bilateral free trade agreement (FTA).
Insurers and banks, which hunt for high-yielding products such as foreign bonds, rallied as US 10-year yields remained comfortably above 3 per cent. Dai-ichi Life Holdings jumped 2.4 per cent and T&D Holdings rallied 2.6 per cent. Sumitomo Mitsui Financial Group gained 1.2 per cent and Mitsubishi UFJ Financial Group advanced 0.9 per cent.
Iron and non-ferrous metal stocks as well as shippers attracted buying on hopes the demand impact from China as a result of the trade frictions will be limited. Nippon Steel & Sumitomo Metal gained 1.5 per cent, JFE Holdings soared 2.2 per cent and Sumitomo Metal Mining jumped 2.7 per cent.
Shippers Kawasaki Kisen added 1.3 per cent and Mitsui OSK Lines surged 2.5 per cent. Construction equipment makers, whose performances are linked to China demand, were also steady. Komatsu gained 3.2 per cent and Hitachi Construction Machinery added 2.7 per cent.
The broader Topix gained 0.7 per cent to 1,799.81.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.