Japan Nikkei hugs 27-year-high

Headline equities of the Japan market were higher on Monday, 1 October 2018, as investors were encouraged by a weaker yen against the dollar, with shares in drug, consumer and some electronic makers being notable gainers. However, market gains capped on concern over Italy's deficit-widening budget plan and after the release of the Bank of Japan survey which showed business confidence among the country's big manufacturers falling for the third consecutive quarter. Around late afternoon trade, the 225-issue Nikkei index was up 143 points, or 0.6%, at 24,263.07. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 3.42 points, or 0.2%, to 1,820.67. The Nikkei index surged to the highest level since November 1991.

Shares of major exporters were higher, supported by a weak yen and expectations for Japanese corporate earnings, with Panasonic up almost 2%, Mitsubishi Electric up 0.6% and Canon up 0.5%, while Sony fell almost 1%.

Shares of Honda Motor declined down 0.5% after the automaker said on last Friday that it will recall 1.4 million U.S. cars to replace Takata front passenger air bag inflators.

Drug, consumer and electronic stocks were also higher, with drug maker Shionogi up 1.8% and chip maker Tokyo Electron up 3.3%.

CURRENCY NEWS: Japanese yen depreciated to mid 113-level against greenback on Monday, as demand for safe heaven unit dimmed, after data reinforced upbeat views about the US economy and backed the Federal Reserve's signal for a steady course of rate increases over the next year. US gross domestic product grew at a 4.2% clip in the second quarter, the fastest in nearly four years, according to government data on Thursday. Another report showed durable goods rose 4.5% in August, rebounding from a revised 1.2% drop the month before. The dollar traded at 113.395 yen after gaining roughly 0.6% overnight to 113.47, its highest since December 2017.

OFFSHORE MARKET NEWS, US stock market closed mixed on Friday, amid uncertainty about trade as the U.S. and Canada approached a September 30 deadline to reach an agreement for Canada to join a trade deal struck between the U.S. and Mexico. The Dow Jones Industrial Average inched up 18.38 points or 0.1% to 26,458.31 and the Nasdaq crept up 4.38 points or 0.1% to 8,046.35, while the S&P 500 edged down by 0.02 points to 2,913.98.

The major European markets ended lower on Friday. The German DAX Index tumbled by 1.5%, the French CAC 40 Index slumped by 0.9% and the U.K.'s FTSE 100 Index fell by 0.5%.

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