Nikkei 225 index muted after US, China ink deal

The market reacted tepidly to what some felt was an expected phase one deal.

Tokyo benchmark index Nikkei 225 performed softly on Thursday morning (16 January), as it dipped 0.23% within the first 90 minutes of trading.

At 10.30am this morning, the Nikkei fell below its previous closing of 23,916.58, but was able to recover at closing to 23,933.13 – an increase of 0.07%.

So far this year, the index has been on an uptrend, having risen over 3.5% since the start of 2020.

Muted market reaction

One possible cause of the tepid reception was because some felt the deal was more limited than they had hoped, which could lead to new issues between the two countries.

In the deal, an 86-page document reiterates previous pledges already made by China. Other key topics, including China’s restrictions on US technology investments, were not addressed.

‘The Tokyo market’s reaction to the US-China trade deal was muted as it fell in line with what investors had expected,’ Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management Co., told The Japan Times.

Investors found that the deal was ‘neither a positive nor a negative surprise’, he added.

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Investors already looking ahead

Japanese broker Toshikazu Horiuchi said that while the Sino-American phase one trade deal signing was momentous, investors are already looking ahead.

‘But since the signing of the US-China deal has ended, investors remained on the sidelines, looking for fresh trading factors,’ Horiuchi told AFP.

‘Now investors are waiting for Japanese corporate results, which will be announced starting later this month,’ he added.

Individual equities were more receptive of the deal. Top-performing major stocks on the day include: Sony Corp, which added 0.71% to 7,936 yen; Uniqlo owner Fast Retailing with 1.38% to 65,210 yen; Suzuki Motor Corp rising 2.5% to 4,832 yen; and Asics Group with 2.52% to 1,703 yen.

On the other hand, top losers include: SoftBank Corporation, tumbling 2.14 per cent to 4,872 yen; and Shiseido Co Ltd, falling 1.38% to 7,873 yen.

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