Nikkei inches higher on strong Chinese economic data; Fed meeting in focus

TOKYO - Japan's Nikkei index ended higher on Tuesday, underpinned by strong economic data from neighbour and key trade partner China, although caution ahead of the U.S. Federal Reserve's first rate hike in three years later this week capped gains.

Markets swung between small gains and losses earlier in the session, as investors weighed risks including a potentially aggressive monetary policy tightening by the U.S. central bank later this week, as well as rapid spread of coronavirus cases in China and the ongoing Russia-Ukraine conflict.

The Nikkei share average edged up 0.15% to end at 25,346,48, after opening the session down 0.35%.


Leading gains among the Tokyo Stock Exchange's 33 industry sub-indexes, insurance stocks rose 2.8%, after U.S. Treasury yields jumped to two-and-a-half year highs overnight. Airlines sector followed, gaining 2.37%.

Oil explorers led decliners with a 6.58% drop, hit by a sharp retreat in crude oil prices. Inpex tumbled 6.82%, erasing most of its more than 9% gains this month.

The broader Topix rallied 0.79% to end at 1,826.63.

Data showing strong gains in Chinese industrial production and retail sales for February lifted Nikkei towards the end of midday trading.

On Monday, the northeastern Chinese province of Jilin, which is scrambling to rein in the fast spread of the Omicron BA.2 sub-variant of the coronavirus, imposed a rare travel ban on its population.

"With the coronavirus spreading quickly in China, investors are worried about what the effect will be on the economy," said a trader at a Japanese securities firm.

"That's going to be a focus until we have more clarity on the outlook."

Automakers stood out, with Subaru's 4.51% jump, making it the top performer on Nikkei. Nissan rose 4.22%, while Toyota gained 2.14%.

Heavyweight chip-making equipment maker Tokyo Electron cut its gains to edge down 0.02%.