SYDNEY, May 8 (Reuters) – Japanese stocks rose on Friday in line with Wall Street earnings as news from key China and US trade officials on the phone calmed worried investors simmer the Sino-American tensions, with cyclics at the head of the rally.
Domestically, hopes of a potential lifting of the state of emergency in Japan in some regions before the national deadline of May 31 also supported investors’ risk appetite, traders said.
The benchmark Nikkei index climbed 2.6% to reach a one-week high at 20,179.09. The index rose 2.9%, up for a second week, although there were only two trading days this week due to holidays.
Leading U.S. and Chinese trade officials on Friday discussed their Phase 1 deal with China, with China saying it has agreed to improve the atmosphere for implementation and the United States saying two parties expected their obligations to be met.
Japanese Economy Minister Yasutoshi Nishimura said Friday that more prefectures are reporting zero coronavirus cases daily and lifting the state of emergency for these regions before the national deadline.
Meanwhile, major Wall Street indices climbed Thursday, the Nasdaq advancing 1.4% to wipe out losses for 2020. E-mini futures for the S&P 500 were rated 1.4% more high in late Asian trade.
The broader Topix gained 2.2% to 1,458.28, with all of the Tokyo Stock Exchange sector sub-indices except one ending in positive territory.
Highly cyclical iron and steel, non-ferrous metals and shipping were the top three performers on the main market.
Nippon Steel Corp and JFE Holdings Inc jumped 7.1% and 7.5% respectively, while Nippon Yusen KK rose 3.7%.
Based on Sino-American phone conversations and their Chinese peers, Chinese stocks listed on the Tokyo Stock Exchange also outperformed, Fanuc Corp up 3.7%, Komatsu Ltd up 2.9% and Hitachi Construction Machinery Co Ltd up 3.9%.
Nintendo Co Ltd lost 3.9% as investors took profit after the company’s fourth-quarter profit climbed 200% due to growing demand for and popularity of its Switch game console “Animal Crossing: New Horizons”.
The Japanese gaming giant predicts a 22.7% drop in net profit for the current year until March 2021, which many analysts consider “too conservative”.
Other notable drivers include the TSE REIT index, up 5.2% to reach its highest closing level since March 13.
Elsewhere, the mothers’ start-up share index fell 2.0% after hitting a nearly three-month high on Thursday, with biopharma AnGes Inc. plunging 24.7%. (Report by Tomo Uetake; Edited by Uttaresh.V and Rashmi Aich)