By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Japanese stocks rebounded Tuesday to take back some of the steep losses they suffered the previous day as banks and several beaten-down shares rallied in the wake of overnight gains on Wall Street.
Other Asian markets ended mixed, after enduring wide swings between gains and losses as strong cues from U.S. stocks were countered by concerns over China’s growth trajectory.
In Japan, the benchmark Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.50% rose 2.1% a day after it plunged 3.7%. The U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0938% climbed back above the psychologically-important level at the end of the day’s stocks trading, just a day after dropping under that level, and was fetching ¥100.16. The broader Topix /zigman2/quotes/210598092/delayed JP:180460 +0.30% ended 2.6% higher.
Japanese bond, stock and currency markets have seen extreme volatility of late amid an increase in the yields on domestic government debt and worries the Fed may pare its asset purchases. Tuesday’s rebound pares the steep losses suffered in Tokyo since May 23, when the Nikkei plunged 7.3%, after posting hefty gains in a rally that started late last year.
“Between the volatility in the yen and the Japanese equity and bond markets, the Bank of Japan, [which] meets next week, may realistically consider increasing the frequency of asset purchases just to renew the rallies,” BK Asset Management managing director Kathy Lien wrote in a note to clients.
Banks rallied after the higher U.S. finish, with Mitsubishi UFJ Financial Group Inc. /zigman2/quotes/207520099/delayed JP:8306 +0.34% soared 7.5%, and Sumitomo Mitsui Financial Group Inc. /zigman2/quotes/203656770/delayed JP:8316 0.00% /zigman2/quotes/206471416/composite SMFG -1.85% spiked 9%.
Stocks in several other sectors rallied as well to take back some recent losses, with Japan Tobacco Inc. /zigman2/quotes/208255672/delayed JP:2914 +0.65% /zigman2/quotes/208949046/delayed JAPAF +2.67% rising 3.4%, real estate developer Mitsui Fudosan Co. /zigman2/quotes/205394574/delayed JP:8801 +1.43% /zigman2/quotes/208297288/delayed MTSFF +4.24% climbing 6.4%, mobile service provider Softbank Corp. /zigman2/quotes/207303954/delayed JP:9984 +0.51% /zigman2/quotes/202815238/delayed SFTBF +0.74% adding 4.1% and steel maker Nippon Steel & Sumitomo Metal Corp. /zigman2/quotes/209782682/delayed JP:5401 +4.07% /zigman2/quotes/203679980/delayed NISTF 0.00% climbing 4.8%.
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Shares of Tokyo Electric Power Co. /zigman2/quotes/202771076/delayed JP:9501 -0.69% /zigman2/quotes/205839055/delayed TKECY +1.05% added 2.5% as a report in the Nikkei newspaper said the power utility and 10 other local firms were considering importing coal together in a move that could slash their transport costs.
Among other companies named as part of the plan, Nippon Paper Industries Co. /zigman2/quotes/206675643/delayed JP:3863 -1.74% rose 3.4%, but Tohoku Electric Power Co. /zigman2/quotes/200823070/delayed JP:9506 -1.49% /zigman2/quotes/210494824/delayed TEPCY -12.59% gained 0.8%.
Rest of the region
Elsewhere, the Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -1.55% gave up 1.2%, and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.31% ended flat, as analysts considered the outlook after the May surveys on Chinese manufacturing by the government and HSBC offered a contrasting view on factory-level activity.
Barclays economist Jian Chang said the divergence in the two monthly Purchasing Managers’ Indexes made it difficult to gauge the strength and direction of the Chinese economy in the near term.
“It is probably fair to say that growth momentum remains soft amid domestic overcapacity, external weakness, uncertain domestic policy and a lack of new stimulus,” Chang said.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.62% also ended flat, while Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.59% added 0.3% after the Reserve Bank of Australia left its policy interest rates unchanged but left the door open to further cuts in future.
Most regional stock benchmarks changed direction at least once after stocks on Wall Street advanced overnight, as weak U.S. manufacturing data reinforced some expectations that the Federal Reserve will maintain its bond purchases — a key tailwind for global equities over the past several quarters.
In Sydney, some financial sector stocks ended with modest gains after the RBA decision. Commonwealth Bank of Australia /zigman2/quotes/200638713/delayed AU:CBA +1.49% /zigman2/quotes/207018701/delayed CBAUF +2.99% climbed 0.3% and Australia & New Zealand Banking Group Ltd. /zigman2/quotes/205482049/delayed AU:ANZ +3.00% /zigman2/quotes/203732563/delayed ANZBY +1.80% rose 0.2%.
In Hong Kong and Shanghai, some Chinese property developers pulled back after recent gains, weighing on the broader market.
Shares of China Overseas Land & Investment Ltd. /zigman2/quotes/205731176/delayed HK:688 +3.01% /zigman2/quotes/202573805/delayed CAOVY +2.37% fell 0.9% and China Resources Land Ltd. /zigman2/quotes/202417326/delayed HK:1109 -1.73% /zigman2/quotes/201656413/delayed CRBJF +13.08% dropped 0.4% in Hong Kong.
Gemdale Corp. /zigman2/quotes/208026094/delayed CN:600383 +2.21% lost 2.7% in Shanghai, and Oceanwide Real Estate Group Co. /zigman2/quotes/205304349/delayed CN:000046 -1.03% dropped 0.5% in Shenzhen.