Week Ahead: Tokyo Shares Seen Swayed by Trade News

TOKYO, Japan – The US-and China trade talks will continue to have a strong impact towards the global stock market, and any news about the trade developments will largely influence the performance of the Tokyo stocks the coming weeks, brokers and analysts say.

The previous statements from both the US and China early in the week about the two largest economies in the world nearing a trade agreement has powered the market into fresh record highs, including Japanese stocks. On Tuesday, the Japanese benchmark Nikkei index closed with a share average rising by 0.47% towards 22, 974.13, although it went up by around 0.78% towards 23, 293.91 previously, marking the highest gains for the index since October. Overall, the Nikkei index has already bagged around 14.25% increase for 2019.

Market players have congregated to riskier assets following the statement from the US President Trump on Monday, saying that he expected to sign the long-standing trade agreement between the US and China before the year ends.

The chief fund manager at the Mitsubishi UFJ Kokusai Asset Management Co. in Tokyo, Kiyoshi Ishigane, has previously stated that the growing chance that the initial trade agreement between the US and China has largely changed the mood in the Japanese market.

However, with the news of President Trump signing the bill that backs the pro-democracy protesters in Hong Kong, which has previously angered China, market players are on the edge of their seats.

For the next trading week, the Japanese Nikkei benchmark index is predicted to move in-range between the 23,150 and 23,700 marks, brokers and analysts say.

However, the senior strategist at the Sumitomo Mitsui DS Asset Management Co., Masahiro Ichikawa, has warned that the benchmark Nikkei index might be in for a dramatic fall if there are no further updates on the progress of the trade discussions with the US and China. Market players are starting to grow increasingly worried that the negotiations between the two countries to end the long-standing trade war may not be going well.

On the other hand, the strategist also stated that the benchmark Nikkei might still experience optimistic gains if new updates on trade talks will arise, especially if it will indicate that an agreement will be signed soon. Ichikawa further said that any news about Washington delaying the new set of tariffs on Chinese products expected to take effect on December 15 would also help pull the Nikkei towards an uptrend.

Meanwhile, a senior technical analyst at the Mizuho Securities Co., Yutaka Miura, commented that investors are also shifting their focus on the economic indicators from the US going forward including the ISM manufacturing index for November set to be published on Monday.