By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks rebounded Friday to
recover some of the steep losses suffered in the previous session,
with exporters aided as the U.S. dollar climbed above Yen101 after
a slew of monthly economic data and strong cues from Wall
Street.
The Nikkei Stock Average ended 1.4% to 13,774.54 a day after it
plunged by 5.2%. But the benchmark still ended with a loss of 0.6%
in May, after rising in each of the past nine months. The broader
Topix rose 0.1% on Friday.
"We think the recent plunge in [the] Nikkei is the result of the
sharp appreciation in the yen and expect it to reverse," said ING
Financial Markets Research economist Sakpal Prakash.
He said the Bank of Japan 's accommodative policies are expected
to lift the dollar (USDJPY) to Yen110 by the end of the year, and
to Yen115 by the end of 2014.
At Friday's close, the Nikkei is still up 32.1% in 2013 to date.
But it remained in a so-called correction territory, having lost
more than 2,168 points, or 13.6%, from its high of 15,942.60 on May
23.
The sharp and swift correction in the Nikkei came amid worries
the Federal Reserve may taper its asset purchases and also concerns
over extreme volatility recently in the Japanese government bond
markets, that also spilled over into the equity markets.
"Massive volatility in Japanese equities has been at the core of
a general sense of unease around Asian markets in recent days,"
said Niall King, an analyst at CMC Markets.
Elsewhere in Asia, South Korea's Kospi and Taiwan's Taiex rose
0.1% each.
On the downside, Australia's S&P/ASX 200 ended down 0.1%,
while Hong Kong's Hang Seng Index was off by the same extent in
afternoon trade.
The Shanghai Composite Index was down 0.4% in Friday afternoon
trade, but looked set to end May as the best performing major
regional benchmark, with a gain of more than 6%.
The broad advances came as stocks on Wall Street rose overnight
on signs of further improvement in the U.S. housing market, while
weaker-than-expected data on first-quarter economic growth and
jobless claims raised hopes the Federal Reserve may keep its
current level of bond purchases.
"Every U.S. data point about the pace of economic growth is
being closely examined by market followers after Federal Reserve
Chairman Ben Bernanke indicated that the central bank could pare
back its stimulus efforts should the U.S. economy continue to
improve," said Perpetual head of investment-market research Matthew
Sherwood.
"The Fed needs to improve its communication with the market
about what its intentions truly are, but the stimulus is only
likely to be reduced, not reversed," he said.
Stock movers
In Japan, the rebound followed data showing April core consumer
prices rose 0.3% from March, although they were 0.4% lower from the
year-ago month.
Japanese industrial production during the same month rose 1.7%
from a year earlier, but a survey indicated lingering pessimism,
with manufacturers tipping flat output for May and a 1.4% drop in
June.
Among the notable gainers in Tokyo, Sony Corp. (SNE) rose 2.1%
following media reports the company has tapped Morgan Stanley and
Citigroup to help sound out options for its entertainment business.
The reports came after billionaire hedge-fund manager Daniel Loeb
recently called on the electronics major to spin off its
entertainment business.
Several other exporters also advanced even as the U.S. dollar
(USDJPY) straddled the Yen101 level.
Shares of Fanuc Corp. (FANUY) rallied 4.3%, and Kyocera Corp.
(KYO) added 2.6%.
Fast Retailing Co. (FRCOY) soared 5.1%, but the magnitude was
still less than half the 11% plunge it suffered in the previous
session amid a broad sell-off across sectors.
Some financial stocks also rebounded modestly Friday, with
Sumitomo Mitsui Financial Group Inc. (SMFJY) rising 0.4%, while
Resona Holdings Inc. (8308.TO) also climbed 0.4%.
In Sydney trade, a retreat in some banks countered gains in
mining stocks. Shares of Evolution Mining Ltd. (CAHPF) gained 3.2%
and Newcrest Mining Ltd. (NCMGY) rose 0.6% after an overnight
improvement in gold prices.
In the broader mining space, BHP Billiton Ltd. (BHP) rose 1.2%,
and Rio Tinto Ltd. (RIO) advanced 2.3%.
But heavyweight Commonwealth Bank of Australia (CBAUY) and
National Australia Bank Ltd. (NABZY) gave up early gains amid
further selling pressure on high dividend-paying stocks ahead of
the weekend. The stocks fell 1.1% each.
Hong Kong stocks fluctuated between gains and losses in choppy
early trading, with heavyweight HSBC Holdings PLC (HBC) and some
property developers climbing on positive cues from the U.S.
But mainland Chinese banks and insurance companies fell on
caution ahead of the release of the monthly Purchasing Managers'
Index data. An official PMI gauge for May was due out Saturday,
while a final reading of a separately compiled PMI from HSBC and
Markit was scheduled for Monday.
HSBC rose 1%, China Resources Land Ltd. (CRBJF) gained 0.6%, and
casino operator Sands China Ltd. (SCHYY) advanced 4.3%.
But shares of China Construction Bank Corp. (CICHY) lost 0.9%,
and China Life Insurance Co. (LFC) declined 1.9%,weighing the
broader market.
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