Japan stocks edge lower on profit booking after trade deal rally

Reuters TOKYO | Updated on December 16, 2019 Published on December 16, 2019

Japanese stocks fell on Monday, slipping from an over one-year high hit in the previous session, as investors booked profits following an initial rally sparked by a preliminary trade deal between the United States and China.

The Nikkei index ended down 0.29% at 23,952.35 as the industrial and materials sectors leading the declines. It is up 20.03% so far for the year.

U.S. Trade Representative Robert Lighthizer on Sunday said a so-called “phase one” deal was “totally done”, notwithstanding some needed revisions, adding that it would nearly double U.S. exports to China over the next two years.

China will purchase the U.S. goods in exchange for the delay of U.S. tariffs on Chinese goods initially scheduled to take effect on December 15 and the reduction of some existing tariffs, but officials in Beijing have been vague about the size of these purchases.

The United States and China had been locked in a 17-month long trade dispute that became the biggest headwind to global economic growth. Scaling back the trade war would be a huge boost to international trade and corporate profits.

“There is some profit-taking, but stocks won't fall too far, because there are a lot of positives in this deal,” said Takashi Hiroki, chief strategist at Monex Securities, Tokyo.

There were 77 advancers on the Nikkei index against 141 decliners on Monday.

The largest percentage losses in the index were Sumitomo Dainippon Pharma Co Ltd down 3.23%, followed drugs maker by Daiichi Sankyo Co Ltd losing 3.02% and mobile game maker Konami Holdings Corp down by 2.72%.

The largest percentage gainers in the index were Internet services firm Z Holdings Corp up 3.24%, followed by marine foods producer Nippon Suisan Kaisha Ltd gaining 2.76% and convenience store operator FamilyMart Co Ltd up by 2.21%.

Some investors are still awaiting clarity about the finer details of the trade deal.

Chinese purchases of agricultural goods are expected to increase to $40 billion to $50 billion annually over the next two years, Lighthizer said.

However, when asked specifically about the $50 billion figure, officials in Beijing said that details on value would be disclosed later.

Lead negotiators are expected to sign the deal during the first week of January in Washington.

The broader Topix index fell 0.18% to 1,736.87.

The volume of shares traded on the Tokyo Stock Exchange's main board was 0.99 billion, compared to the average of 1.24 billion in the past 30 days.

Published on December 16, 2019
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