Japan Market gains ahead of trade talks

Headline indices of the Japan share market advanced on Thursday, 10 October 2019, as appetite for risk assets underpinned on tracking gains on the Wall Street overnight after report that China was open to a partial trade deal. However, market gains were capped after Cabinet Office data revealed that Japan core machinery orders fell for the second consecutive month in August and as China's has lowered expectations for significant progress from this week's trade talks due to the US Commerce Department's blacklisting of 28 Chinese companies. Around afternoon trade, the 225-issue Nikkei Stock Average added 64.45 points, or 0.3%, to 21,520.83, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 2.47 points, or 0.16%, at 1,579.23.

Total 20 industries of the 33 industry category of Topix index declined into negative territory, with Insurance, Construction, Real Estate, Services, and Warehousing & Harbor Transportation Services issues being notable losers, while Marine Transportation, Securities & Commodities Futures, Retail Trade, and Chemicals issues were notable gainers.

Investor sentiment got a boost after reports that China remained open to agreeing to a partial trade deal with the United States and offering to increase its annual purchases of US agricultural products.

However, market gains were capped after Cabinet Office data revealed that Japan core machinery orders fell for the second consecutive month in August and as Beijing has lowered expectations for significant progress from this week's trade talks due to the US Commerce Department's blacklisting of 28 Chinese companies.

Market participants remained focused on the resumption of trade talks in Washington D.C. between the U.S. and China with import tariffs set for $250 billion worth of Chinese goods at a rate of 30% from from 25% on 15 October 2019. A 15% tariff on an additional $160 billion worth of Chinese imports is also expected to kick in on 15 December 2019. The world's two largest economies have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

On economic data front, Japan's core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, fell 2.4% in August from the previous month, Cabinet Office data showed on Thursday. The drop was followed a sharp 6.6% fall in July. From a year earlier, core orders, which exclude those of ships and electricity, lost 14.5% in August.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of uncertainty, depreciated against greenback on Thursday. The Japanese yen traded at 107.54 per dollar after seeing an earlier high of 107.02.

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