Japan Nikkei rebounds on signs of progress towards trade truce

Headline indices of the Japan share market rebounded from 18-months low on Wednesday, 12 December 2018, as risk appetite buying buoyed by halt in the appreciation of the yen against the dollar, signs of progress towards trade truce after Beijing's decision to cut tariffs on imported American cars from 40% to 15%, and as US President Donald trump sounded upbeat about a trade deal with China. Also, sentiment had got lift from news that Huawei chief financial officer Meng Wanzhou, who faces extradition to the US, was granted bail in Canada. All 33 issues of the Topix index inclined, with shares in Precision Instruments, Securities & Commodities Futures, Electric Appliances, Machinery, Oil & Coal Products, and Marine Transportation issues being notable gainers. In late afternoon trades, the 225-issue Nikkei index added 411.87 points, or 2%, at 21,559.89. The broader Topix index of all First Section issues on the Tokyo Stock Exchange rose 29.86 points, or 1.9%, to 1,605.17.

The risk appetite buying underpinned after a reports that China is moving to cut import tariffs on American-made cars from 40% to 15%, and news that Huawei chief financial officer Meng Wanzhou, who faces extradition to the US, was granted bail in Canada.. That report came after Chinese Vice Premier Liu He exchanged views on the next stage of trade talks with U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer. U.S. President Donald Trump said in an interview with reporters that talks were taking place with Beijing by phone and he would not raise tariffs on Chinese imports until he was sure about a deal.

Investors were looking ahead to the US consumer price report later on Wednesday where an expected slowdown in headline inflation would only reinforce speculation of fewer rate hikes from the Federal Reserve.

Shares of exporters gained, with auto makers were top performer, thanks to a cheaper yen and reports that China is moving to cut tariffs on cars. Yamaha Motor surged 5.3%, Mitsubishi Motor jumped 3.2%, while Toyota inched up 2%. Nissan rebounded 1.6% after tumbling 3.1% yesterday and 2.9% on Monday after ousted chairman Carlos Ghosn was charged and faced new allegations of alleged financial misconduct. Sony jumped 2.7% and Panasonic rose 3%.

CURRENCY NEWS: The Japanese yen, which can be a haven during market uncertainty, depreciated in the mid-113 yen range against dollar. The dollar fetched at 113.35 yen in Asian trade, little changed from 113.40 yen in New York but up slightly from 113.10 yen in Tokyo late yesterday.

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