June 1, 2020 / 6:30 AM / a month ago

Nikkei rallies to 3-month high as U.S.-China worries ease for now

SYDNEY, June 1 (Reuters) - Japan’s stock benchmark Nikkei rose to a three-month high on Monday, as U.S. President Donald Trump’s threats against China over new security laws for Hong Kong were less threatening than feared.

The Nikkei average gained 0.8% to 22,062.39, its highest close unseen since Feb. 26.

The rally was led by short-covering as some investors had worried Trump could ditch his trade deal with China or call an immediate end to privileges to Hong Kong after the Chinese parliament passed new security legislation for the semi-autonomous city last week.

“There remain many other hurdles ahead, but clearly President Trump will try to avoid roiling markets until his election unless absolutely necessary,” said John Vail, chief global strategist at Nikko Asset Management.

Investors are now focused on the global economic recovery as more countries gradually move to re-open their economies — the main driving force behind the market’s rally since late March.

Japan’s capital of Tokyo eased curbs to contain the coronavirus on Monday, by allowing gyms and theatres to reopen in a phased relaxation process.

Clouding the outlook, however, are jitters over protests and riots in many U.S. cities after an unarmed black man died in police custody in Minneapolis last week.

Highly cyclical securities brokerages and metal products were among the best-performing sectors on the main bourse, up 1.6% and 1.3%, respectively.

Chipmaking-related stocks also did well after the U.S. Philadelphia semiconductor index gained 2.7% on Friday on hopes of strong demand related to new technologies such as 5G wireless communications.

Screen Holdings climbed 4.7%, while Tokyo Electron rose 4.4% and Advantest jumped 5.8%.

Elsewhere, the index of Mothers start-up shares advanced as much as 2.8% to clear the 1,000 mark for the first time since early December 2018.

The broader Topix edged up 0.3% to 1,568.75, though decliners outnumbered gainers by a ratio of 52 to 48. (Reporting by Tomo Uetake; Editing by Jacqueline Wong and Subhranshu Sahu)

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