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Japan's Nikkei was flat on Friday morning as investors braced for the results of the weekend meeting between the leaders of the United States and China, while the steel sector was dragged down by a brokerage's downgrade.
Many investors stayed on the sidelines ahead of the G20 summit in Buenos Aires, where President Donald Trump was due to meet his Chinese counterpart Xi Jinping to discuss trade and other thorny issues.
The Nikkei share average was flat at 22,261.92 at the midday break, after moved in and out of positive and negative territory. For the week, the Nikkei has gained 3 per cent, and it was up 1.7 per cent for the month, recouping some of October's 9.1 per cent tumble.
“Investors are expecting a photo of Trump and Xi smiling and shaking hands after agreeing to continue dialogue,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“They may not reach a deal in one day, but as long as the market confirms that the two countries will continue dialogue before the US's 25 per cent tariffs on Chinese goods starts on January 1, there may not be a big confusion in the market.”
Some Tokyo investors were encouraged on Friday by a rise in oil prices . Crude oil has lost almost one-third in value since early October because of an emerging supply glut following a global surge in production, one factor pressuring the market.
Inpex Corp surged 3.0 per cent and Japan Petroleum Exploration gained 2.7 per cent. The steel sector, though, lost ground after Daiwa Securities cut its rating to “neutral” from “positive”.
Daiwa said that export margins have been high since steel supply and demand in China improved significantly in 2017, but Japanese integrated steelmakers continue to miss profit opportunities due to lower output stemming from operational issues.
JFE Holdings tumbled 3.4 per cent to its lowest since July 2017 and Nippon Steel & Sumitomo Metal dropped 1.4 per cent. Murata Manufacturing rose 1.7 per cent after the ceramic capacitors maker announced its mid-term business plan on Thursday. It aims for an profit margin of 17 per cent and return on invested capital of more than 20 per cent in the year ending March 2022.
The broader Topix added 0.3 per cent to 1,664.17.
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