Japanese Stocks Decline, Halting Two-Day Rally; SoftBank Surges

Japanese stocks slid, halting the best two-day rally for the Topix index since 2008, as oil explorers and mining companies led declines and the yen strengthened. SoftBank Group Corp. surged for a second day after announcing a record share buyback.

The Topix fell 1.1 percent to 1,282.40 at the close in Tokyo, swinging from a gain of 1.1 percent, after the measure surged 8.4 percent in the past two days. The Nikkei 225 Stock Average dropped 1.4 percent to 15,836.36. The yen traded at 113.85 per dollar, strengthening for a second day. 

“The negative mood in the market hasn’t dissipated yet,” Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset Management in Tokyo, said by phone. “So the market remains sensitive to uncertainty. It’s going to take time for that to disappear.”

A measure of mining companies and oil and coal producers fell the most among the Topix’s 33 industry groups. Energy explorer Inpex Corp. and Japan Petroleum Exploration Co. tumbled at least 5.5 percent, while Nittetsu Mining Co. lost 1.7 percent. Crude retreated Tuesday amid bets that a pledge by the two biggest oil producing nations to freeze output won’t succeed in tackling the global surplus.

The Topix communication sector, which includes SoftBank, was the biggest boost to the Topix, while car manufacturers and drug makers were the gauge’s largest drag. SoftBank jumped 5.8 percent, extending Tuesday’s 16 percent surge, after saying it’ll spend $4.4 billion buying back its shares.

Global shares rallied the past three days after more than $8 trillion was wiped from the value of equities since the start of the year amid concern growth in the world’s largest economies is weaker than forecast.

Japan’s currency has strengthened this year even as the Bank of Japan carries out unprecedented stimulus policies that would typically weigh on the currency.

For many market watchers, Japan’s rebound this week was overdue as technical signals had been flashing that stocks were oversold for a month. With the Topix down 23 percent for the year through Friday, shares were trading at book value. The last time valuations were that low was the beginning of Prime Minister Shinzo Abe’s administration, when stocks were beginning a rally that would see the index double over the next three years.

Investors jumped back into riskier assets after global equities tumbled into a bear market last week, weighed down by plunging commodity prices, concerns about slowing economic growth and disillusionment in the ability of central banks to buoy financial markets.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.3 percent after the underlying gauge jumped 1.7 percent on Tuesday. U.S. stocks posted the best two-day gain in more than five months as trading resumed after a holiday.

“The Japanese market has rebounded for two days, so it’s possible that investors may take profit,” Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo, said by phone. “The risk-off mood has eased a little as of yesterday, but markets are still in a stormy climate and lack stability.”

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