Japan Market recovers as yen weakens

Headline shares of the Japan share market were higher after recouping early losses on Thursday, 01 August 2019, as the yen's depreciation helped overcome early losses triggered on tracking fall in Wall Street overnight after the Federal Reserve signaled caution on future interest-rate cuts and private survey showed Chinese factory activity contracted in July. Most of Topix sectors inclined, with securities house, bank, and transportation equipment issues being notable gainers. Around late afternoon, the 225-issue Nikkei Stock Average rose 14.74 points, or 0.07%, to 21,536.27, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 2.64 points, or 0.17%, at 1,567.78.

Overnight, the Federal Reserve cut rates by 25 basis points in a widely expected move, citing global developments and muted inflation as reasons, but signaled caution on future interest-rate cuts. Some investors are betting on more than one rate cut this year, and while the Fed's policy statement left the door open for the Fed to reduce rates again, Federal Reserve Chairman Jerome Powell suggested Wednesday that this cut wasn't the beginning of a long easing cycle.

The Fed's decision came on the same day as another round of US-China trade talks concluded with few signs of concrete progress. The two sides conducted frank, efficient and constructive in-depth exchanges on major economic and trade issues, according to Chinese media reports. The White House said Wednesday that both sides discussed topics such as forced technology transfer, intellectual property rights, services, non-tariff barriers and agriculture. U.S. and Chinese trade negotiators plan to meet again in early September 2019. U.S. President Donald Trump and Chinese President Xi Jinping reached a truce in June at the G-20 summit in Japan after trade talks collapsed in May that prompted a steep U.S. tariff hike on $200 billion of Chinese goods.

A private survey showed Chinese factory activity contracted in July. The Caixin/Markit factory Purchasing Managers' Index came in at 49.9. PMI readings above 50 indicate expansion, while those below that signal contraction. That number came after official data released Wednesday showed Chinese factory activity contracting for the third straight month in July.

Shares of exporters advanced, supported by a weaker yen. Toyota Motor Corp rose 1.3%, Honda Motor Co edged up 0.9%, Canon Inc added 1% and Nintendo advanced 3.8%. Advantest rose more than 2%.

Nomura Holdings soared 8.5% the investment bank said its first-quarter profit soared more than ten-fold after restructuring its portfolio.

Takeda Pharmaceutical, which gained 5.8% after its sales in the April-June quarter increased 88.8%.

Kao Corporation fell 3.5% after the cosmetic product maker saw its January-June net profit decline 8.8%.

ECONOMIC NEWS: Japan Manufacturing PMI Up Fractionally In July-- Japan manufacturing sector contracts with a manufacturing PMI score of 49.4, the latest survey from Jibon revealed on Thursday. That's up fractionally from 49.3 in June, and it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Individually, firms reduced their output for the seventh straight month as weak domestic and foreign demand persists. Output prices also fell as firms looked to stimulate sales. Looking ahead, manufacturers maintained a subdued outlook for production volumes over the coming 12 months.

CURRENCY NEWS: The Japanese yen traded at 109.18 against the dollar after weakening from the 108.5 handle in the previous session

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