Nikkei rises, US-China trade talk optimism lifts cyclicals

TOKYO: Japanese stocks rose on Wednesday as optimism over US-China trade talks boosted shippers and other cyclical shares while index heavyweight Fast Retailing soared after it reported strong monthly sales.

The Nikkei share average rose 0.97 percent to 21,713.21, edging closer to its best level this year of 21,860.39 touched a month ago.

Shippers, among the biggest casualties of the US-China trade war, gained 2.8 percent to near one-month highs, with Kawasaki Kisen rising 5.6 percent.

The Financial Times reported that top US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute but are still haggling over how to implement and enforce the agreement, citing people briefed on the talks. (https://www.ft.com/content/d6ac5082-5582-11e9-91f9-b6515a54c5b1)

The report came on the heels of US President Donald Trump's comment that the trade talks with China were going very well.

"The market is supported by hopes that both sides will land some kind of agreement," said Hiroyuki Ueno, a senior strategist at Sumitomo Mitsui Trust Asset Management.

But he said that investors were reluctant to take positions aggressively this month as they prefer to await Japanese companies' annual results due to be reported in May.

Other cyclical stocks, including chip-related firms, machinery makers and security brokers, led the gains.

Shinetsu Chemical rose 4.3 percent, TDK gained 3.4 percent and Fanuc Corp advanced 2.7 percent.

Japan Display jumped 6.3 percent to a 10-week high after Reuters reported the cash-strapped firm will begin to supply organic light-emitting diode (OLED) screens for the Apple Watch later this year.

Fast Retailing Co soared 5.4 percent after it said on Tuesday that same-store sales at its Uniqlo clothing outlets in Japan rose 4.5 percent in March from a year earlier.

Japanese media reports that the operator of the Uniqlo casual clothing chain will raise starting salaries for new hires in Japan by more than 20 percent from April next year also helped the share. (https://www3.nhk.or.jp/nhkworld/en/news/20190403_07/)

As the firm has an 8.8 percent weighting in the Nikkei, that helped the benchmark index outperform the broader Topix, which rose 0.63 percent to 1,621.77.

The start-up market, Mothers Index, rose 1.2 percent from a three-week low hit the previous day.