TOKYO: Japan’s Nikkei share average jumped to the highest in almost three months on Tuesday as the US and China agreed to temporarily slash harsh reciprocal tariffs, easing concerns that their trade war could trigger a global recession.
The Nikkei surged as much as 2.3% to 38,494.06 shortly after the open, a level last seen on February 21, before entering the midday recess up 1.7% at 38,296.86.
Of the index’s 225 components, 152 rose, compared to 73 that fell.
The broader Topix gained 1.2%. Under the truce announced on Monday, the US will cut extra tariffs it imposed on Chinese imports last month to 30% from 145% for the next three months, while Chinese duties on US imports will fall to 10% from 125%.
But the pause did little to address the underlying schisms that led to the dispute, including the US trade deficit with China.
“For now, some of the uncertainty surrounding the global trade situation has been relieved,” said Maki Sawada, a strategist at Nomura.
“Tariffs were slashed more than expected,” she said. “US stagflation concerns have come down a notch.” Shipping was the top performer among the Tokyo Stock Exchange’s 33 industry groupings, climbing 4.2%.
Banking was next with a 3.8% advance, as a jump in bond yields improved the outlook for investment and lending income.
Japan’s Nikkei rises on US-China trade deal hopes
Pharma rebounded 3.6% following Monday’s steep drop as US President Donald Trump moved to reduce prescription drug and pharmaceutical prices.
Automakers gained 2.7% following a sharp drop in the yen against the dollar overnight, which boosts the value of overseas revenues.
Toyota climbed 3.7%, and Nissan advanced 3.2%. Nissan announces financial results after the bell, with national broadcaster NHK reporting the troubled carmaker plans more than 10,000 additional layoffs globally.
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