Japan Stocks Gain for Third Day as Banks, Commodity Shares Jump

Japanese stocks rose for a third day as banks gained and a recovery in oil prices boosted commodity-related shares.

The Topix index added 1.4 percent to 1,369.05 at the close in Tokyo, with three stocks rising for each that fell. The Nikkei 225 Stock Average advanced 1.3 percent to 16,960.16. Oil rose for a fourth day to the highest level in two months. The Standard & Poor’s 500 Index climbed for a second day, extending an eight-week high for U.S. equities.

“We’re starting to see that the U.S. economy is stronger than we thought, and uncertainties are clearing away,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management Co. “That led to U.S. share gains and that’s following through into Japan. Short-squeeze is the main driver right now, but we’ll likely start to see some fundamental buying soon too.”

The Topix Banks Index gained 6.2 percent, with Mitsubishi UFJ Financial Group Inc. jumping 7.9 percent. Oil explorer Inpex Corp. added 5.8 percent. Toshiba Corp. surged 7.1 percent after the Nikkei newspaper reported the appliance maker may get an additional loan from its main banks. Land transport stocks fell, including Central Japan Railway Co., which slumped 3.1 percent.

Short-selling of shares in Tokyo fell to about 36 percent of total turnover on Wednesday, its lowest level this year. It was as high as 42.6 percent on Monday.

The yen weakened to 114.08 per dollar after gaining 0.5 percent on Wednesday. Japan’s megabanks are calling time on the yen’s four years of depreciation, a blow to Bank of Japan Governor Haruhiko Kuroda’s chances of reviving inflation and growth. Bank of Tokyo-Mitsubishi UFJ Ltd., Sumitomo Mitsui Banking Corp. and Mizuho Bank Ltd. all see the yen ending the year stronger than where it started. And all three have revised up their 2016 forecasts as the yen gained 6.7 percent in the first two months of the year.

Futures on the S&P 500 Index added 0.1 percent. The underlying equity measure added 0.4 percent on Wednesday, extending an eight-week high, with banks and energy shares rallying for a second day as improving data bolstered optimism on the economy.

A private report Wednesday showed companies in the U.S. added more workers than forecast to their payrolls, another positive signal on the economy after gauges showing stability at American factories, major carmakers and in the public and private construction industries helped spur a rally Tuesday. The improving data has also raised the odds the Federal Reserve will boost borrowing costs this year.

Traders have raised the odds of a Fed interest-rate hike this year, with the chance of an increase in June at 38 percent, up from about 26 percent a week ago. The probability of a move in December jumped to 66 percent from 42 percent last Wednesday.

Oil held gains after closing at the highest level in almost two months in New York following a government report that showed U.S. refineries boosted their use of crude. Crude has surged 32 percent since closing at a 12-year low on Feb. 11 on speculation low gasoline prices will boost demand.

“U.S. markets were stronger, and we’re seeing follow-through buying from yesterday, while oil is steady,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd. “Plus Japanese bonds have a negative yield while banks have a great yield.”

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