April 4, 2019 / 6:50 AM / 8 months ago

Nikkei edges up to 1-month high on trade optimism

* Carmakers, chip-related shares lead gains

* Defensive shares out of favour, Topix post small losses

By Ayai Tomisawa

TOKYO, April 4 (Reuters) - Japan’s Nikkei edged up to a one-month high on Thursday as investors bought carmakers and other cyclical shares on growing hopes that a trade deal can be reached between Washington and Beijing.

The Nikkei share average ended 0.05 percent higher at 21,724.95 points, its highest closing level since March 5.

Carmakers, which have been undermined by worries about global slowdown and threats from U.S. President Donald Trump to impose tariffs on imported cars, rose 0.9 percent. They have risen 4.8 percent over the past five sessions.

Honda Motor rose 0.9 percent while Toyota Motor gained 0.7 percent.

Nissan, whose former chairman Carlos Ghosn was re-arrested on Thursday on suspicion of trying to enrich himself at the automaker’s expense, rose 0.6 percent.

Chip equipment makers and silicon products makers also sprinted higher following a surge in their U.S. peers, although some of them lost momentum in late afternoon.

Keyence gained 3.3 percent to a record high while Advantest Corp rose 2.1 percent to 11-year highs.

On Wednesday, the Philadelphia Semiconductor index surged 2.3 percent to record highs.

“Investors took heart from strong American shares, but this is also part of a spring rally as the new fiscal year began and new funding is allocated,” said Katsuhiko Nakamura, a director and senior technical analyst at Mizuho Securities.

Nakamura said that foreign investors have been net buyers of Japanese cash stocks in the month of April for the past 18 years, citing data from the Tokyo Stock Exchange.

“Foreigners have been net sellers of Japanese stocks so far this year, but investors are focused on whether there is a turnaround this month,” he said.

Optimism about Sino-U.S. trade talks has supported investor risk appetite this week, especially in export-reliant Asian economies which have suffered collateral damage from the escalating dispute.

On Wednesday, White House economic adviser Larry Kudlow said trade talks between the United States and China made “good headway” last week in Beijing.

Investors rotated out of defensive shares which they had bought earlier this year.

East Japan Railway fell 2.0 percent to 1 1/2-month lows while Central Japan Railway dropped 1.6 percent.

Takeda Pharmaceutical shed 1.2 percent.

With many other sectors including banks and food companies posting losses, the broader Topix ended 0.1 percent down at 1,620.05, failing to maintain earlier gains. (Additional reporting by Hideyuki Sano Editing by Sam Holmes & Kim Coghill)

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