Japan Market extends gain on upbeat offshore cues, cheaper yen

The Japan share market advanced for second day in row on Wednesday, 16 October 2019, on tracking gains on the Wall Street overnight after better than expected corporate earnings. Meanwhile, buying sentiments propelled further on yen depreciation against greenback and optimism over the possibility of a breakthrough in Brexit negotiations. Around afternoon trade, the 225-issue Nikkei Stock Average advanced 256.65 points, or 1.16%, to 22,463.86, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange grew 10.51 points, or 0.65%, at 1,630.71.

Total 22 issues of the 33 industry category of Topix index inclined into positive territory, with Glass & Ceramics Products, Rubber Products, Pharmaceutical, Electric Appliances, Precision Instruments, and Banks issues being notable gainers, whereas Mining, Fishery, Agriculture & Forestry, and Marine Transportation issues were notable losers.

Investor risk sentiment underpinned on tracking gains on the Wall Street overnight after the big banks on the front lines of America's economy reported mostly upbeat results on Tuesday. Also, optimism over the possibility of a breakthrough in Brexit negotiations boosted sentiments. The U.K. and the European Union moved close to agreeing upon a draft plan for Britain to leave the bloc, with a preliminary Brexit deal possible by Wednesday. EU chief negotiator Michel Barnier told a meeting of government ministers earlier in Luxembourg that a deal on a draft Brexit text was needed overnight if he was to recommend on Wednesday that EU leaders sign off on an agreement when they meet later this week.

Market gains were, however, limited after fresh International Monetary Fund report that lowered the 2019 and 2020 growth forecasts and warned of a "precarious" outlook if trade conflicts continue to fester. The IMF on Tuesday cut its 2019 global growth forecast, calling for the weakest pace since the financial crisis. In its World Economic Outlook, published Tuesday, the IMF sees global economic growth falling to 3% this year, the slowest pace since the 2008 financial crisis.

Shares of export-linked companies rallied after the Japanese yen hit a 2-1/2 month low against the greenback. Among blue-chip exporters, NIDEC advanced 2.3%, Mitsubishi Electric soared 3.5% and Omron climbed 2.7%. Yen-sensitive automakers were also in demand, with Toyota Motor Co rising 1.2% and Mazda Motor jumping 2.3%.

Shares of chip-related firms got a boost after the U.S. Philadelphia semiconductor index hit a record high and NVIDIA soared 5.3% on Tuesday. Tokyo Electron added 1.8%, Advantest jumped 3.7% and Screen Holdings climbed 2.4%.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, depreciated against greenback on Wednesday, as investors flocked to riskier assets on hopes of an orderly British exit from the European Union. The Japanese yen traded at 108.68, weakening from levels around 108.37 earlier in the week.

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