Japan Market gains to 3-1/2-week highs on yens soft tone

Headline indices of the Japan share market advanced on Tuesday, 17 July 2018, as investors continued value buying, thanks to yen hovering mid 112-zone against the dollar and receding U.S.-China trade tensions. Among TSE33 issues, 29 issues inclined, while 4 declined, with shares of Pulp & Paper, Land Transportation, Other Financial Business, Foods, Electric Power & Gas, Marine Transportation, Air Transportation, and Securities & Commodities Futures issues being notable gainers. Around late afternoon, the benchmark Nikkei 225 index inclined 0.8%, or 183.56 points, to 22,780.91, the highest point since 21 June 2018. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, rose 1.2%, or 20 points, to 1,750.06. Japan markets were closed on Monday for a national holiday.

Shares of export-related players gained, thanks to yen depreciation against greenback. A weaker yen tends to help Japanese exporters' profits made abroad when repatriated. Toyota Motor Corp and Nissan Motor Co advanced in a range of 0.5% to 1.5%.

Shares of machinery makers, particularly those having significant business exposure to China, were under pressure amid concern about the strength of China's economy. China reported on Monday that its economic growth slowed down in the second quarter and that factory output growth in June weakened to a two-year low, a worrying sign for investment and exporters as a trade war with the United States intensifies. Yaskawa Electric, Okuma Corp, and Fanuc fell in between range of 2% to 6%.

CURRENCY NEWS: The Japanese yen was little against U.S. dollar in Tokyo on Tuesday. The dollar strengthened 0.2 percent against the yen to 112.41 yen, ticking up towards a six-month high of 112.80 yen on July 13.

OFFSHORE MARKET: US stock market closed mixed on Monday, as investors weighed earnings results against trade tensions. The Dow Jones Industrial Average rose 44.95 points, or 0.2%, to 25,064.36. The S&P 500 index fell 2.88 points, or 0.1%, to 2,798.43. The Nasdaq Composite Index fell by 20.26 points, or 0.3%, to 7,805.72.

The major European markets also ended mixed on Monday. The STOXX600 index fell by 0.3%, but Germany's DAX index was up 0.2%. The UK FTSE index fell by 0.8%.

COMMODITY NEWS: Crude oil prices fell on Monday as Libyan ports began to re-open and slowing Chinese growth weighed on broader sentiment. Russian Energy Minister Alexander Novak's comments that Russia may lift oil output by more than 200,000 barrels per day also weighed on crude oil prices. Brent crude fell by US$3.49 or 4.6% to US$71.84 a barrel and the US Nymex fell by US$2.95 or 4.2% to US$68.06 a barrel.

Base metal prices fell on the London Metal Exchange (LME) on Monday, extending their 5-week decline. Zinc fell 3.6% and copper by 0.8% to near 1-year lows on China growth concerns.

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