Japan Nikkei rises on expectations for LDP leadership race

Japan share market finished higher for second straight session on Wednesday, 19 September 2018, with investor sentiment buoyed by following the overnight gains on Wall Street and a cheaper yen. Meanwhile, expectations Japanese Prime Minister Shinzo Abe will win the Liberal Democratic Party's leadership election added support. The 225-issue Nikkei average gained 251.98 points, or 1.08%, to end at 23,672.52, after surging 325.87 points Tuesday. The Topix index of all first-section issues finished up 25.78 points, or 1.46%, at 1,785.66.

Abe, who returned to office in December 2012 pledging to bolster defences and reboot the economy, is widely expected to defeat his rival, former defence minister Shigeru Ishiba, for leadership of the LDP. Expectations for a large supplementary budget grew among some investors due to growing speculation that Prime Minister Shinzo Abe is likely to win a third straight term as president of the ruling Liberal Democratic Party in Thursday's election,

Equity markets in Asia took their cues from Wall Street overnight, which posted a broad-based rally on Tuesday amid emerging views that the US-China trade dispute's impact on world growth might not be as heavy as previously feared. The administration of U.S. President Donald Trump announced Monday that it will impose a 10% tariff on $200 billion worth of Chinese imports from Sept. 24 and increase the rate to 25%, effective on Jan. 1 next year. In response, China said it will hit back with retaliatory duties of up to 10% on $60 billion worth of U.S. products. A risk-on mood grew among investors as the tariffs were smaller than initially feared.

Banks and insurers were upbeat after a rise in U.S. long-term interest rates. Mega-bank groups Mitsubishi UFJ Financial Group Inc. closed up 1.49% and Sumitomo Mitsui Financial Group Inc. up 1.68%, while insurer Dai-ichi Life Holdings Inc. jumped 4.21%.

Semiconductor-related names attracted purchases after their U.S. peers fared well overnight. They included Tokyo Electron, Advantest Corp. and Sumco Corp.

ECONOMIC NEWS: Japan logs 444.6 billion Yen trade deficit -- Japan recorded trade deficit of 444.594 billion yen in August, the Ministry of Finance said on Wednesday, following the 231.9 billion yen deficit in July. Exports climbed 6.6% on year to 6.691 trillion yen, up from 3.9% in the previous month. Imports jumped an annual 15.4% to 7.136 trillion yen, up from 14.6% a month earlier.

Bank of Japan maintains record low policy rates-- The Monetary Policy Board of the Bank of Japan as widely expected kept its record low monetary policy unchanged on Wednesday. The board retained the -0.1% interest rate on current accounts that financial institutions maintain at the bank. The BoJ will conduct purchases of Japanese government bonds in a flexible manner so that the outstanding amount will increase at an annual pace of about JPY 80 trillion. Regarding economic outlook, the bank said Japan's economy is likely to continue its moderate expansion. Inflation is likely to increase gradually toward 2%, mainly on the back of the output gap remaining positive and medium- to long-term inflation expectations rising, BoJ added.

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