Japan Stocks subdued ahead of this week's US-China trade talks

Headline indices of the Japan share market were lower on Monday, 07 October 2019, as risk sentiments subdued amid concerns over next round of US-China trade negotiations expected in Washington on Oct. 10-11 to see if the two sides can end a bruising year-long trade war that has hurt global growth and raised the risk of recession. Around late afternoon, the 225-issue Nikkei Stock Average dropped 44.62 points, or 0.21%, to 21,365.58, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 1.72 points, or 0.11%, at 1,571.18.

Total 21 industries of the 33 industry category of Topix index declined into negative territory, with Fishery, Agriculture & Forestry, Rubber Products, Mining, Banks, and Pulp & Paper issues being notable losers, while Retail Trade, Information & Communication, Services, and Land Transportation issues were notable gainers.

Tokyo market commenced trading with a firm-foot on tracking gains on the Wall Street last Friday as moderate U.S. jobs growth in September 2019 eased recession fears while maintaining rate cut expectations. However, market failed to hold momentum amid caution ahead of the Sino-U.S. trade talks scheduled to resume Thursday and Friday.

The United States and China are expected to meet again this week in Washington for another round of trade talk, when Chinese Vice Premier Liu He meets U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington. Ahead of this week's trade talks between the world's two largest economies, there were reports that Chinese officials are growing hesitant to pursue a broad trade deal pursued by U.S. President Donald Trump.

The outcome from this week's trade discussions "will likely be pivotal in determining if the two sides can reach an interim trade deal that postpones further tariff escalation. Tariffs on $250 billion worth of Chinese goods are scheduled to rise to 30% from 25% on Oct. 15. Also, the Trump administration plans to impose 15% tariffs on December 15 on consumer-facing imports from China, including laptops, smartphones and certain footwear and apparel. Both countries have slapped tariffs on billions of dollars worth of each other's goods, which has roiled global markets, created uncertainty and dampened economic growth outlooks around the world.

Shares of Apple-related Japanese electronic parts makers advanced on expectations of strong demand for the iPhone, thanks to reports stating that Apple Inc had told suppliers to increase their production of its latest iPhone 11 range by up to 10%. Murata Manufacturing climbed 1.7%, TDK Corp gained 0.8%, and Taiyo Yuden advanced 0.7%.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of uncertainty, appreciated against greenback on Monday. The Japanese yen traded at 106.72 per dollar after strengthening from levels above 108 in the previous trading week.

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