Japan Nikkei rises to five-week high as trade worries ease

Japan share market inclined to fresh five-week high on Tuesday, 28 August 2018, buoyed by a record close on Wall Street overnight as the U.S. and Mexico announced a new trade agreement. In addition, a weaker yen lifted exporters' shares. Total 23 issues out of 33 TSE index inclined, with shares of Marine Transportation, Rubber Products, Transportation Equipment, Nonferrous Metals, and Machinery issues being notable gainers, while Fishery, Agriculture & Forestry, Foods, Retail Trade, and Pulp & Paper issues were notable losers. Around late afternoon trade, the benchmark Nikkei 225 index rose 0.4%, or 88 points, to 22,887.62. The broader Topix index of all First Section issues on the Tokyo Stock Exchange climbed up 0.4%, or 6.59 points, to 1,735.54.

On Monday, the United States and Mexico announced that a deal had been agreed upon after months of negotiations between the two countries over the future of the North American Free Trade Agreement. US President Donald Trump and outgoing Mexican President Enrique Pena Nieto hailed the new trade agreement, which raises hopes the North American Free Trade Agreement can be salvaged after Canada rejoins the talks on Tuesday. The new deal includes provisions on auto trade, tougher worker protections, which President Donald Trump has said would be called The United States-Mexico Trade Agreement, is expected to last 16 years and will be reviewed every six years pending its approval by Congress, according to U.S. Trade Representative Robert Lighthizer.

Exporters such as automakers and tech companies led the gains, with Mitsubishi Electric and Canon rising more than 1% each, while Sony rose 1% and Panasonic was higher by almost 1%. Toyota Motor Corp surged almost 2% after the company said it will invest an additional $500 million in ride-hailing company Uber for the development of self-driving cars.

Shares of Denso rose 2% and Aisin Seiki was up 2.4% after the two auto parts companies of Toyota group said they will set up a joint venture with two other smaller firms aimed at developing software for auto driving.

CURRENCY NEWS: Japanese yen depreciated against greenback. The dollar fetched 111.14 yen in Asian trade, up modestly from 111.07 yen in New York.

OFFSHORE MARKET NEWS, US stock market climbed to fresh all-time highs on Monday, as the Trump administration sealed a bilateral trade deal with Mexico. The Dow Jones Industrial Average jumped 259.29 points or 1% to 26,049.64, the Nasdaq advanced 71.92 points or 0.9% to 8,017.90 and the S&P 500 climbed 22.05 points or 0.8% to 2,896.74.

The major European stock markets ended higher on Monday. The German DAX Index jumped by 1.2% and the French CAC 40 Index climbed by 0.9%, while the U.K. markets were closed for a holiday.

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