Japanese stocks advanced, erasing earlier declines, as exporters rebounded after the yen weakened. Shares earlier followed U.S. stocks lower amid continued concern about the potential for tighter monetary conditions in the world’s largest economy.
Honda Motor Co., a carmaker that gets 47 percent of sales in North America, swung to a 2 percent gain from a 3 percent loss as the yen fell. Dowa Holdings Co., Japan’s biggest silver producer, soared 8.5 percent after Bank of America Merrill Lynch recommended its shares. Kirin Holdings Co., Sumitomo Electric Industries Ltd. and Central Japan Railway Co. dropped at least 2.4 percent after surging before the close yesterday.
The Topix index added 0.7 percent to close at 1,099.40 in Tokyo after retreating as much as 2.9 percent. The gauge rose 4.1 percent this week, the first weekly advance in a month. The Nikkei 225 Stock Average climbed 1.7 percent to 13,230.13, after sliding to as low as 12,702.67.
“Once the Nikkei drops below 13,000, the market tends to stop falling,” said Gentoku Kiyokawa, Tokyo-based head of Japanese investment management at BNP Paribas Investment Partners, which oversees the equivalent of $647 billion. “Japanese stocks seem almost done with the correction. They started falling first and have declined the most.”
The Topix has fallen about 14 percent from an almost five-year high on May 22 after Prime Minister Shinzo Abe’s growth strategy disappointed investors and amid concern global stimulus will be cut. The gauge is still up 28 percent this year.
Japan’s broader equity measure has swung an average of about 3.2 percent daily since May 22. The Topix’s 30-day historic volatility was at 40.84 today, near its highest level since the 2011 earthquake and tsunami.
Volume on the Topix was about 24 percent below the 30-day average. Low volume amplifies price swings, said Yutaka Miura, a senior technical analyst at Mizuho Securities Co., a unit of Japan’s third-biggest lender by market value.
“We’re not going to see big buying until the market stabilizes,” Miura said. “The market has been so volatile that investors can’t place orders easily.”
Futures on the S&P 500 increased 0.5 percent. The index fell 2.5 percent yesterday in New York, its biggest loss in 19 months. The Fed will probably taper its $85 billion in monthly bond buying later in 2013 and halt purchases around mid-2014 as long as the world’s largest economy performs in line with Fed projections, Bernanke said on June 19.
Scaling back U.S. stimulus will have mixed outcomes for Japanese equities. It will damp demand for risk assets globally, while at the same time causing the dollar to strengthen against the yen, buoying the earnings outlook for exporters.
Exporters rose as the yen dropped against all but one of its 16 major counterparts, weakening for a fifth day against the dollar. Honda added 2 percent to 3,580 yen and Canon Inc., a camera maker that gets 79 percent of its revenue abroad, rose 1.7 percent to 3,270 yen. Nissan Motor Co., a carmaker that generates about 80 percent of its revenue outside Japan, gained 2 percent to 1,030 yen.
Japanese stocks gained even as most other regional gauges fell, with the MSCI Asia Pacific excluding Japan Index dropping 0.6 percent.
Retailers climbed the most among the Topix’s 33 industry groups, with Fast Retailing Co., Asian’s biggest apparel chain, rising 4.8 percent to 31,050 yen. The retailer controlled by Tadashi Yanai, Japan’s richest man, accounted for about 26 percent of the Nikkei 225’s net increase today.
Dowa Holdings jumped 8.5 percent to 872 yen, the most since May 10, after Bank of America Merrill Lynch upgraded its rating to buy, citing growth in non-commodity areas such as electronic materials, environmental management and recycling, and automotives.
Kirin, Japan’s largest brewer by market value, slumped 4.9 percent to 1,588 yen after jumping 4.3 percent just before the close yesterday. Sumitomo Electric Industries Ltd. lost 4.4 percent to 1,176 yen and Central Japan Railway Co. slid 2.4 percent to 11,230 yen after similar surges. The share movements yesterday were “treated as normal,” Japan Exchange Group Inc. spokesman Kazuhiko Yoshimatsu said.