Japan's Topix Caps Biggest Four-Day Gain Since November 2016

(Bloomberg) -- Japan’s Topix index completed its biggest advance over a four-day period since November 2016 while the yen remained near a two-month low against the dollar as investors brushed off concerns of a trade war between the U.S. and China.

Electronics and machinery shares were the biggest boosts to the benchmark as China’s Ministry of Finance said Beijing is still ready to negotiate an end to the trade tensions. China announced retaliatory tariffs against $60 billion of U.S. goods as the Trump administration threatened duties on virtually all Chinese imports. Japanese stocks held gains after the Bank of Japan left policy unchanged following a two-day meeting.

“The conflict between the U.S. and China may cease for now, and the possibility of further trade sanctions has declined,” said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo. “The yen staying weak could lead to risk-on mode overall.”

The Topix rose more than 1 percent for a fourth straight session, the first time it has accomplished that feat since July 2013. The gauge is still down 1.8 percent for 2018, and is trading at 13.3 times estimated 12-month forward earnings.

Japan's Topix Caps Biggest Four-Day Gain Since November 2016

Japanese stocks could “swing to the upside” as early as this week or no later than November around the time of the U.S. midterms, strategists led by Masashi Akutsu at SMBC Nikko Securities Inc. wrote in a note Tuesday. The market’s price-to-earnings ratio has largely factored in an economic slowdown up to December, they wrote. Net selling among foreign investors has hit a record pace in 2018, leaving little room for more selling, according to the note.

Summary

  • Topix +1.5% to close at 1,785.66 in Tokyo; pushes 4-day gain to 5.6%
  • Nikkei 225 +1.1% to 23,672.52, highest since Jan. 24
  • Yen little changed at 112.32 per dollar after weakening 0.5% on Tuesday
  • Electronics: Keyence +2.3%, Nidec +3%, Murata Manufacturing +2.9%
  • Machinery makers: Daikin Industries +3.2%, Komatsu +3.8%, SMC +3.6%
  • AGC +4.1%; considers boosting capacity of Thai chlor-alkali business
  • Sosei Group -22%, biggest decliner in Japan; Sosei and Allergan suspend HTL0018318 development on primate study
  • Itoham Yonekyu -3%; cuts 1H operating profit forecast 32% to 7.5b yen, lowers full-year target
  • Capcom -1.3%; co. says Monster Hunter performance offsets 4.5b yen charge

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