Japan Market gains ahead of U.S.-China trade deal, yen depreciation

The Japan share market advanced on Tuesday, 14 January 2020, as investors risk sentiments underpinned on optimism over the signing of a phase-one trade deal between the U.S. and China on Wednesday in Washington. Also contributing to the equities' run-up was yen depreciation against greenback and other major currencies after reports that the United States is planning to lift its designation of China as a currency manipulator. Around late afternoon, the 225-issue Nikkei Stock Average advanced 130.81 points, or 0.55%, to 23,981.387, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange grew 1 points, or 0.06%, at 1,736.16.

Total 21 issues of the 33 industry category of Topix index dived into negative territory, with Oil & Coal Products, Pulp & Paper, Warehousing & Harbor Transportation Services, Electric Power & Gas, Mining, and Banks issues being notable losers, while Iron & Steel, Electric Appliances, Information & Communication, and Nonferrous Metals issues were notable gainers.

Markets have rebounded with no further escalation in the Middle East tensions and the focus shifting to the Phase 1 trade deal. The U.S. President Donald Trump and Chinese officials are set to sign the long-awaited phase one trade deal between the two countries on Wednesday, 15 January 2020, in Washington to ease the 18-month trade war. The Trump administration has invited at least 200 people to the White House for the ceremony. China's chief trade negotiator, Vice Premier Liu He, and a delegation are slated Wednesday to sign the so-called phase one trade deal in Washington. The deal will involve some tariff relief, increased Chinese purchases of U.S. agricultural goods and changes to intellectual property and technology rules. The agreement will also include clauses that seek to prevent China from devaluing the yuan to "unfairly compete against U.S. exporters.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, weakened past 110 per dollar for the first time in almost eight months as demand for demand for haven assets sapped after reports that the Trump administration removed its designation of China as a currency manipulator before Wednesday's planned signing of a phase-one agreement. The yen's haven appeal has also been dented by easing U.S.-Iran tensions, which saw it slump last week by the most since October.

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