By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks jumped Friday amid
expectations that the rally that began late last year may have
further to go, with relief buying emerging after the extreme losses
Tokyo suffered the previous day.
Most other regional markets also bounced after Thursday's
sell-off, although Australian shares skidded on extended losses for
the banking and resource sectors.
The Nikkei Stock Average climbed 2.7% in Tokyo after diving 7.3%
in the previous session, while the broader Topix advanced 2.5%
after Thursday's 6.9% plunge.
"Thursday's stomach-turning correction in Japan and Asia
ultimately strikes us mostly as a 'mere' step-back .... on a
continuing upward path for Japanese and Asia-Pacific equities,"
said Nomura Securities equity strategist Michael Kurtz.
The Nikkei Average is still up more than 60% since the beginning
of November 2012.
A recovery in the U.S. dollar (USDJPY), which moved back above
the Yen102 level after slipping below Yen101 on Thursday, helped to
lift exporters, with financials also taking back some of their
losses.
The bounce in equities also preceded Bank of Japan Gov. Haruhiko
Kuroda's scheduled appearance before lawmakers later in the day.
Kuroda's testimony comes amid concerns about upward pressure on
Japanese government bond (JGB) yields, despite the central bank's
plans to buy up JGBs on an unprecedented scale.
Thursday's plunge in Japanese equities occurred against a
backdrop of extreme volatility in the bond market, which forced the
Bank of Japan to step in and offer funds to soothe investor
nerves.
Still, some analysts said the recent spike in Japanese sovereign
yields didn't undermine the Bank of Japan's credibility.
"The spike in JGB yields has raised the concern that markets
might already be challenging the Bank of Japan's new
quantitative-easing policy. But in sending yields much higher while
moderately buying the yen at the same time, the market discounted
brighter nominal [economic] growth, rather than challenged policy
credibility," Société Générale global head of foreign-exchange
sales Sebastian Galy wrote to clients.
In Thursday's trading in Tokyo, stocks across the board saw
buying support.
Shares of Mazda Motor Corp. (MZDAY) climbed 7.2%, Shinsei Bank
Ltd. (SKLKF) jumped 6.1%,mobile-service provider Softbank Corp.
(9984.TO) rose 3.8%, real-estate major Mitsui Fudosan Co. (8801.TO)
gained 3.2% and insurer Dai-ichi Life Insurance Co. rose 3.2%.
Other regional markets
Elsewhere in the region, South Korea's Kospi and China's
Shanghai Composite gained 0.3% each, and Taiwan's Taiex edged up
0.2%, also recovering from Thursday's losses.
Australia's S&P/ASX 200 fell 0.7%, dropping further amid
worries about Chinese economic growth after disappointing
preliminary results from HSBC's survey on manufacturing activity in
China.
Hong Kong's Hang Seng Index was 0.1% higher after moving in and
out of negative territory.
Financial stocks declined in Sydney amid worries about the
economic outlook. Commonwealth Bank of Australia (CBAUY) and
National Australia Bank Ltd. (NABZY) dropped 1.1% each.
Some resource-sector stocks dropped in Sydney amid lingering
concerns about demand in the wake of Thursday's China manufacturing
data.
BHP Billiton Ltd. (BHP) lost 1%, with Woodside Petroleum Ltd.
(WOPEY) also down 1%.
However, Newcrest Mining Ltd. (NCMGF) rose 3.5% after gold
futures rallied overnight.
Shares of Echo Entertainment Group Ltd. plunged 10.5% after
Crown Ltd. sold a 10% stake in the casino operator.
In Hong Kong, shares of Lenovo Group Ltd. (LNVGY) jumped 4.2%,
on top of the 2.9% advance Thursday in the wake of a 34% jump in
annual profit for the computer maker.
But some property developers and insurers mostly fell to keep
the market under pressure, with China Overseas Land &
Investment Ltd. (CAOVY) losing 1.7% and China Life Insurance Co.
(LFC) down 1%.
Developer Cheung Kong Holdings Ltd. (CHEUY) fell 2.2% as the
stock traded without rights to a dividend.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires