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Headline indices of the Japan share market advanced on Tuesday, 18 September 2018, with investors seeking out issues that have been oversold recently on hopes that Prime Minister Shinzo Abe will win a Liberal Democratic Party (LDP) leadership election on Thursday. However, market gains were capped on fears of escalation in trade tensions between the U.S. and China escalated after U.S. President Donald Trump imposed 10% tariffs on about $200 billion worth of Chinese imports, while China has pledged to retaliate to any new tariffs imposed by the U.S. All 33 issues out of 33 TSE index inclined, with shares of Air Transportation, Iron & Steel, Insurance, Oil & Coal Products, Warehousing & Harbor Transportation Services, Real Estate, and Chemicals issues being notable gainers. The 225-issue Nikkei Stock Average rose 1.41%, or 325.87 points, to 23,420.54. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, added 1.81%, or 31.27 points, to 1,759.88. Japan share market closed on Monday, 17 September 2018, for the respect for the aged day holiday.
Abe, who returned to office in December 2012 pledging to bolster defences and reboot the economy, is widely expected to defeat his rival, former defence minister Shigeru Ishiba, for leadership of the LDP.
US President Donald Trump on Monday defied warnings and escalated the trade confrontation with China, hitting the country with tariffs starting next week on another $200 billion in imports and threatening to target even more if Beijing retaliates. The latest round of imports will face 10% tariffs through the end of the year, and then the rate will jump to 25%.
Only last week, Beijing said it welcomed overtures from US officials offering to re-start trade talks, but press reports indicate China would call off any meetings if the new punitive duties take effect. Trump warned that if China takes retaliatory action against "our farmers or other industries", Washington could raise tariffs on $267bn of additional imports. That would mean imposing new taxes on all of the goods the US imports from China.
Shares of insurers climbed as investors chased for higher yielding products after US Treasury yields soared on Monday on hopes the US central bank could raise interest rates twice more this year. Dai-ichi Life Holdings jumped 4.2% and MS&AD Insurance soared 4%.
Electronic suppliers underperformed after Apple Inc said Trump's tariff decision could hit a "wide range" of its products. Murata Manufacturing shed 1.4%, Alps Electric tumbled 2.1% and Kyocera Corp declined 0.9%.
CURRENCY NEWS: Japanese yen was tad firmer against greenback and other major currencies on Tuesday, as investor demand for safe-haven currency renewed on the back of latest round of U.S. tariffs on Chinese imports. The dollar eased to Y111.77 from Y111.83 in New York on Monday afternoon.
OFFSHORE MARKET NEWS, US stock market closed down on Monday. The Dow Jones Industrial Average fell 92.55 points or 0.4% to 26,062.12, the Nasdaq plunged 114.25 points or 1.4% to 7,895.79 and the S&P 500 slid 16.18 points or 0.6% to 2,888.80.
The major European markets also closed down on Monday. The French CAC 40 Index and the German DAX Index edged down by 0.1% and 0.2%, respectively, while the U.K.'s FTSE 100 Index closed just below the unchanged line.
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