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Japan shares rise as easing Middle East tension shifts focus to trade deal

Published 10/01/2020, 07:36
Updated 10/01/2020, 07:45
© Reuters.  Japan shares rise as easing Middle East tension shifts focus to trade deal

© Reuters. Japan shares rise as easing Middle East tension shifts focus to trade deal

By Stanley White

TOKYO, Jan 10 (Reuters) - Japanese shares rose on Friday as

demand for riskier assets increased, buoyed by de-escalation of

diplomatic tension in the Middle East and hopes that the

so-called Phase 1 U.S.-China trade agreement will boost

corporate earnings.

The benchmark Nikkei index .N225 ended up 0.47% at

23,850.57 points. The index rose 0.82% in a week of volatility

when a Wednesday Iranian missile strike on U.S.-led forces in

Iraq rippled through global financial markets.

The attack, which followed the U.S. killing of a prominent

Iranian general last week, sparked fears of wider conflict.

However, global equity markets quickly stabilised after both

the United States and Iran signalled the desire to avoid war.

Market focus consequently returned to the signing of a trade

deal between the United States and China to defuse a months-long

trade war, which would reduce risk in the global economic

outlook.

"Geopolitical risks simply do not tend to have a long-term

impact on financial markets," said Shusuke Yamada, head of

foreign exchange and Japan equity strategy at Merrill Lynch

Japan Securities.

"There were some risks to the outlook last year, like trade

friction, but these factors are not in play this year. There is

no reason to sell risky assets, which is good for equities. I

expect the Nikkei to rise to 25,000 by the end of March."

U.S. President Donald Trump, who last month said the Phase 1

deal would be signed on Jan. 15, on Thursday said the agreement

could be signed "shortly thereafter". The deal is likely to reduce U.S. tariffs on Chinese goods

and boost Chinese purchases of U.S. agricultural products -

measures whose effects are widely expected to propagate

throughout the corporate world, pushing up earnings.

There were 120 advancers on the Nikkei index on Friday

against 91 decliners, while the remaining 14 members of the

index were unchanged.

The largest percentage gainers were industrial machinery

maker IHI Corp 7013.T at 5.14%, followed by semiconductor

manufacturing equipment maker Screen Holdings Co Ltd 7735.T

gaining 4.05%, and convenience store operator Seven & i Holdings

Co Ltd 3382.T at 3.7%.

The largest percentage losses were apparel retailer Fast

Retailing Co Ltd 9983.T at 2.78%, followed by Chubu Electric

Power Co Inc 9502.T losing 2.35%, and automaker Isuzu Motors

Ltd 7202.T at 1.92%.

Fast Retailing cut its full-year profit outlook due to

worse-than-expected quarterly earnings results on Thursday, hit

by Hong Kong protests and a South Korean consumer boycott of

Japanese goods that dented sales at its Uniqlo stores.

The broader Topix index .TOPX rose 0.35% to 1,735.16 on

Friday. For the week, the Topix was up 0.80%.

The volume of shares traded on the Tokyo Stock Exchange's

main board .TOPX was 1.09 billion, compared to the average of

1.12 billion over the past 30 days.

Trump says China trade deal may be signed shortly after Jan. 15

Fast Retailing cuts outlook after Asia strife hits

Uniqlo sales ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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