Japan Nikkei extends gain to third day

Japan share market advanced for third consecutive session on Tuesday, 20 August 2019, as risk sentiments bolstered on tracking positive lead from Wall Street overnight on eased concerns over global recession. Meanwhile, People's Bank of China debut of its new loan prime rates (LPR) under a new mechanism to lower borrowing costs for companies and reports that Germany may also be considering stimulus measures underpinned gains for stocks. Around late afternoon, the 225-issue Nikkei Stock Average rose 86.48 points, or 0.42%, to 20,649.64, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 8.08 points, or 0.54%, at 1,502.41.

Total 27 sub-indexes out of 33 sub-indexes of Topix index industry category ended into positive territory, with Real Estate, Electric Appliances, Chemicals, Metal Products, Machinery, and Marine Transportation issues being notable gainers, while Rubber Products, Air Transportation and Electric Power & Gas issues were notable losers.

U.S. stocks rallied on Monday, lifted by encouraging comments from President Donald Trump and other officials on trade talks, along with a move by China to lower borrowing costs for companies. The Dow Jones Industrial rose 249.78 points, or 1%, to end at 26,135.79, while the S&P 500 index added 34.97 points, or 1.2%, to close at 2,923.65. The Nasdaq Composite Index advanced 106.82 points, or 1.4%, to finish at 8,002.81.

Investors were encouraged by growing hopes that major economies would act to stymie the slowing economic effects of escalating global trade tensions. People's Bank of China (PBOC) debut of its new loan prime rates (LPR) under a new mechanism to lower borrowing costs for companies, close on the heels of news of a potential German economic easing.

The People's Bank of China (PBOC) debuted its new loan prime rates (LPR) under a new mechanism that was unveiled over the weekend. The new 1-year LPR was set at 4.25%, as compared to 4.31% previously. The 5-year LPR was at 4.85%. Meanwhile, German Finance Minister Olaf Scholz over the weekend suggested the government could come up with $55 billion in stimulus if needed.

The Commerce Department said Monday that it has given Chinese telecom giant Huawei Technologies Co. Ltd. another 90-day reprieve during which it can continue to do business with American companies, without the granting of case-by-case licences that would otherwise be needed, after the Commerce Department added it to its entity list in May.

Meanwhile, market participants are awaiting for Wednesday's release of minutes from the Fed's July policy meeting, when the central bank cut rates for the first time in more than a decade, and Federal Reserve Chairman Jerome Powell speech at a central banks meeting in Jackson Hole on Friday to signal that a fed-funds rate cut will be delivered at the central bank's next meeting Sept. 17-18.

CURRENCY NEWS: The yen, a gauge of risk sentiment due to its perceived status as a safe haven, weakened on Tuesday. The Japanese yen traded at 106.59 against the dollar after weakening from levels below 106.5 yesterday.

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