Japan Nikkei gains as Asian peers rise on stimulus policy

Headline shares of the Japan share market closed higher on Monday, 19 August 2019, as risk sentiments underpinned on following a positive lead from Wall Street on Friday with investors buying back issues that fell heavily last week. Meanwhile, sentiments were further boosted up after comments from Donald Trump's top economic adviser hailing "positive" trade talks with top Chinese negotiators and optimism that central banks will provide fresh support to head off a global economic recession. At closing bell, the 225-issue Nikkei Stock Average rose 162.58 points, or 0.8%, to 20,581.39, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 9.68 points, or 0.65%, at 1,494.97.

Total 31 sub-indexes out of 33 sub-indexes of Topix index industry category ended into positive territory, with Oil & Coal Products, Securities & Commodities Futures, Real Estate, Retail Trade, Marine Transportation, Banks, and Construction issues being notable gainers.

 

Wall Street shares had rebounded on Friday after a report that Germany's coalition government was prepared to set aside its balanced budget rule in order to take on new debt and launch stimulus steps to counter a possible recession.

Investors were also encouraged by the potential for improvement in US-China trade relations after White House chief economic adviser Larry Kudlow said that if talks between deputies from Beijing and Washington went well and "we can have a substantive renewal of negotiations" then "we are planning to have China come to the USA and meet with our principals to continue the negotiations". He added that high-level phone talks last week were "a lot more positive than has been reported". Trump provided further cause for hope by tweeting: "We are doing very well with China, and talking." Kudlow also raised the prospect of using cash taken from higher tariffs on Chinese goods to pay for tax cuts.

Moreover, in a move viewed as a guided rate cut China's central bank on Saturday unveiled key interest rate reform to help steer borrowing costs lower for companies and support a slowing economy caught in the grip of a bruising trade war with the US.

ECONOMIC NEWS: Japan merchandise trade deficit came in at 249.6 billion yen in July, the Ministry of Finance said on Monday, following the 589.5 billion yen deficit in June. Exports were down 1.6% on year, following the upwardly revised 6.6% drop in the previous month (originally -6.7%). Imports dipped an annual 1.2% following the 5.2% fall a month earlier.

CURRENCY NEWS: The yen, a gauge of risk sentiment due to its perceived status as a safe haven, weakened on Monday. The Japanese currency last traded at 106.375 per dollar, having pulled back from a seven-month peak near 105.00 reached a week ago.

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