INSUBCONTINENT EXCLUSIVE:
Japan's Nikkei rose on Tuesday as investors bought beaten-down cyclical stocks and firms which are raising profit forecasts, tempering fresh
worries about US-China trade frictions.
The Nikkei share average ended 1.5 per cent higher at 21,457.29 points, posting the biggest daily
It had opened lower following overnight weakness on Wall Street where big technology and internet shares declined sharply.
The broader Topix
rose 1.4 per cent to 1,611.46 in heavy trade, with more than 4 trillion yen in turnover, the highest level since late May.
The spike in
turnover was caused by passive investors' portfolio rebalancing due to the Topix index's annual free-float adjustment for companies whose
business years ending March.
US shares fell after Bloomberg reported that Washington is planning an additional $257 billion worth of tariffs
on Chinese goods if upcoming talks between Presidents Donald Trump and Xi Jinping fail to end the trade war.
During late Asian trade, gains
started building as some traders looked to strength in Chinese stocks which rebounded from Monday's declines after the securities regulator
said it would enhance market liquidity.
Traders also noted that sentiment may have been supported by comments from Trump that he thinks
there will be "a great deal" with China on trade.
"I think that we will make a great deal with China and it has to be great, because they've
drained our country," Trump said in an interview with FOX News Channel's "The Ingraham Angle" on Monday.
"There were expectations that Trump
may have something in mind to ease US-China trade war tensions," said Chihiro Ohta, general manager of investment research at SMBC Nikko
Securities.
Tuesday's gainers included recently-sold cyclical stocks such as machinery makers and auto shares.
"Since global investors are
selling growth stocks with high valuations, it's hard to buy Japanese stocks in the same category
In this situation, cheaply-valued cyclical stocks are outperforming," said Norihiro Fujito, a chief investment strategist at Mitsubishi UFJ
Morgan Stanley Securities.
He said domestic long-term investors such as pension funds are seen picking up beaten-down stocks after the value
of their stock holdings dropped due to the recent sell-off.
Honda Motor Corp and Nissan Motor Corp, whose price-earnings ratios are at 8.3
and 7.9, respectively, rose 2 per cent and 1.5 per cent.
Mega banks were in demand, with Mitsubishi UFJ Financial Group and Mitsui Sumitomo
Financial Group gaining 2.3 per cent and 2.2 per cent, respectively
Both banks are trading below their book values.
Machinery stocks also gained ground, with Yaskawa Electric and Shima Seiki Mfg jumping 6.1
per cent and 5.5 per cent, respectively, with traders citing investors' short-covering.
With first-half Japanese corporate earnings in
focus, construction equipment maker Komatsu Ltd surged 6.2 per cent after it raised its full-year operating profit forecast thanks to strong
sales of mining equipment in the US and Indonesia.
Factory automation robot maker Fanuc Corp soared 3.4 per cent despite a cut in its profit
forecast as the company's decision to pay special dividends offset the negative news
