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China's U.S. imports tariff cuts propel Japan shares to best day in 13 months

ForexFeb 06, 2020 09:00
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China's U.S. imports tariff cuts propel Japan shares to best day in 13 months

* China says to halve some tariffs on U.S. imports

* Nikkei leaps 2.4%, Topix up 2.1%

* Trade turnover tops 3 trln yen, highest in 2 months

* Earnings season in full swing in Japan

By Tomo Uetake

TOKYO, Feb 6 (Reuters) - Japanese shares posted their

biggest one-day gain in more than a year on Thursday as investor

sentiment was buoyed after China cut tariffs on some imported

goods from the United States, lifting some of the gloom from a

fast-spreading virus outbreak.

The benchmark Nikkei average .N225 jumped 2.4%, its most

since late December 2018, to a two-week closing high of


The broader Topix .TOPX advanced 2.1% to 1,736.98, also

marking its best day in 13 months. Turnover on the main board

hit 3.05 trillion yen ($27.7 billion), the highest since Dec.

"Although buying in index futures was the main driver of

today's market, more than 3 trillion yen worth of turnover (in

cash equities) implies some real buying was also happening,"

said Takeo Kamai, head of executions services at CLSA in Tokyo.

"The key here is whether we can clear the iron ceilings --

24,000 in the Nikkei and 110 yen in the dollar/yen. If we break

above those levels, we are likely to see more full-fledged

buying from investors."

All of the 33 sector subindexes on the Tokyo Stock Exchange

were in positive territory, led by cyclical sectors. Insurance

.IINSU.T , oil and coal products .IPETE.T and precision

machinery .IPAPR.T were the top three performing subindexes.

Stocks extended earlier gains after China said it will halve

tariffs on some U.S. goods from Feb. 14, corresponding with U.S.

pledges to cut levies on some Chinese goods after the two sides

reached a partial trade deal early last month. The announcement was seen by analysts as a move by Beijing

to boost confidence amid the coronavirus outbreak that has

disrupted much of its economy and is increasingly rippling

through global supply chains.

"Under the phase 1 deal, China has to meet a tough target to

increase U.S. imports by $100 billion this year, so a measure

like this was necessary and expected," said Tomo-o Kinoshita,

global market strategist at Invesco Asset Management.

"But at the same time, that they did this now points to

their desire to support Chinese companies as the coronavirus

epidemic will obviously deal a huge blow to China's growth."

China said it hopes to work with the United States to

eliminate all tariff increases in future.

Overnight, the S&P 500 .SPX climbed 1.1% to a record close

and the Nasdaq Composite .IXIC added 0.4% to an all-time peak,

while the Dow .DJI advanced 1.7%, following an upbeat ADP

private sector jobs report and ISM's non-manufacturing index.

.N The greenback hit a two-week high of 109.985 yen JPY=EBS ,

providing a tailwind for Japanese exporters, as a weaker local

currency boosts corporate profits when they are repatriated.

With the earnings season in full swing in Japan, Toyota

Motor Corp 7203.T rose 2.6% after the country's biggest

automaker raised its forecast for annual operating profit by

4.2%, citing favourable currency rates and better-than-expected

vehicle sales. Pan Pacific International Holdings Corp 7532.T soared

17.7% after the discounter Don Quijote's parent raised its

operating profit forecast for the year ending June. Holdings Corp 4689.T surged 6.0% after the internet

services firm reported a net profit of 75.1 billion yen for the

April-December period, up 7% from a year earlier, due to its

consolidated subsidiary of ZoZo. Bucking the overall firmness, DeNA Co Ltd 2432.T dived

9.7% after the mobile partner of Nintendo booked a 49.4 billion

yen writedown as its gaming business falters in Japan's

saturated mobile market. Although the financial markets found some comfort, traders

admitted concerns about the coronavirus outbreak and its broader

impact on individual companies and the economy.

The death toll in mainland China jumped by 73 to 563 as

experts intensified efforts to find a vaccine for the disease

that has shut down Chinese cities and forced thousands more into

quarantine around the world. Drugmakers and the World Health Organization played down

reports about progress towards finding treatments, which had

boosted traders' confidence. = 109.9400 yen)

China's U.S. imports tariff cuts propel Japan shares to best day in 13 months

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