Japan Nikkei surges on Fed, China Policy Boost

Headline indices of the Japan share market surged on Monday, 07 January 2019, as appetite for riskier assets renewed on tracking gains on Wall Street last Friday after soothing Federal Reserve comments and an easing of monetary policy in China. All 33 subindexes of the Tokyo Stock Exchange's were in positive territory, with shares in Marine Transportation, Machinery, Electric Appliances, Real Estate, Nonferrous Metals, and Iron & Steel issues being notable gainers. In late afternoon trades, the 225-issue Nikkei index spurted 551.41 points, or 2.82%, at 20,113.37. The broader Topix index of all First Section issues on the Tokyo Stock Exchange surged 41.71 points, or 2.84%, to 1,512.87.

Risk appetite got a huge boost after Federal Reserve Chairman Jerome Powell sought to ease market concerns about the risk of a slowdown, saying the central bank would be patient and flexible in policy decisions this year.

Looking ahead, investors kept their eyes on trade ties between Washington and Beijing, with delegations from both sides set to hold negotiations Monday. U.S. and Chinese officials will begin trade negotiations on Monday in the hope of reaching a deal during a 90-day truce between President Donald Trump and his counterpart Xi Jinping. U.S. President Donald Trump said on Sunday that the talks were going very well and that weakness in the Chinese economy gave Beijing a reason to work toward a deal.

ECONOMIC NEWS FRONT: Japan services sector continued to expand in December, with a PMI score of 51.0, the latest survey from Nikkei revealed on Monday. That's down from 52.3 in November, although it remains above the boom-of-bust line of 50 that separates expansion from contraction. Individually, a weaker rise in new sales hampered output growth, although job creation accelerated to a three-month high and business confidence remained elevated. Nikkei also said its composite index slipped to a reading of 52.0 in December, down from 52.4 in the previous month

CURRENCY NEWS: The Japanese yen, which can be a haven during market uncertainty, depreciated in the upper 108 yen zone against dollar on Monday. The dollar stood at 108.53 yen, firming from 108.44 yen in New York on Friday.

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