Japan's stocks advance on optimism U.S.-China trade tensions to ease
Japanese stocks rose, with the Topix heading for a 12-day rally, on optimism trade tensions between the U.S. and China may begin to deescalate after two days of talks over the weekend.
The benchmark index climbed 0.3% to 2,740.91 as of 9:04 a.m. Tokyo time, set to complete its longest advance since October 2017. The Nikkei 225 Stock Average rose 0.4% to 37,646.88. Out of 1,689 stocks in the broader Topix, 1,115 rose and 411 fell, while 163 were unchanged.
The U.S. and China both reported "substantial progress' after talks in Switzerland aimed at deescalating a trade war, though neither side announced specific measures. Chinese Vice Premier He Lifeng said the world's two biggest economies agreed to create a mechanism for further talks.
"It's not yet clear what exactly is involved, so we'll have to wait and see what comes out going forward,' said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. "The yen is weakening, and at the very least, there doesn't seem to be a negative market reaction. As we wait for specific announcements, the general trend of recovery is likely to continue.'
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Shares of Japanese drugmakers slumped after President Donald Trump said he plans to order a cut in U.S. prescription drug costs by mandating that Americans pay no more than people in countries that have the lowest price. Daiichi Sankyo dropped 3.2%, while Kissei Pharmaceutical fell 2.3%.
The Nikkei 225 has climbed 5% through Friday since Trump announced so-called reciprocal tariffs on April 2, among the best performing major markets. Japan last month was one of the first countries to formally engage in talks with the U.S., though agreement is yet to be made.
Prime Minister Shigeru Ishiba intends to reach a trade agreement with the U.S. in July, around the time of an Upper House election.
Investors are also watching closely earnings results and outlook from Japanese companies, with firms including SoftBank Group, Nissan Motor and Sony Group scheduled to report this week.
Chinese stocks, meanwhile, posted modest gains and the yuan strengthened on signs that trade tensions with the U.S. are thawing.
The Hang Seng China Enterprises Index gained as much as 1.5%, while the CSI 300 Index rose as much as 0.6% during early trading on Monday. Both indexes are close to recouping their losses since Trump's "Liberation Day" announcement of tariffs on April 2.
But investors and strategists say they will need more details about exactly what progress has been made in the U.S.-China talks before they become too bullish.
"We do need to see details and that will allow investors to assess the size of the market impact moving forward,' said Nick Twidale, chief market analyst at AT Global Markets. Still, "the news over the weekend is very positive for Chinese markets in general."
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