ASIA MARKETS: Asian Stocks Continue Their Early-year Rally

By Kenan Machado Features Dow Jones Newswires

Hang Seng extends winning streak; BOJ reduces long bond purchases

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Asian stocks extended their New Year rally Tuesday, though Japanese equities pared gains after the Bank of Japan trimmed the size of its bond-repurchase offer by 5% in its latest market operation.

Japan's Nikkei Average still ended up 0.6% at 23,849.99, hitting a new 26-year closing high and catching up with regional gains after a market holiday on Monday.

But shares pulled back after the central bank's decision to cut the size of its offer for bonds maturing in 10 to 25 years by 5% to Yen190 billion ($1.7 billion) sent the yen higher.

Some saw the BOJ's move as a sign of slight policy tightening.

However, Rodrigo Catril, a currency strategist at National Australia Bank, said the central bank was trying to stop the Japanese bond yield curve from flattening, as the gap between two- and 10-year U.S. Treasurys has reached its narrowest point since the global financial crisis.

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ANZ senior strategist Irene Cheung said the yen's jump was the result of the currency having been heavily shorted of late.

The dollar was recently at Yen112.65, versus Yen113.15 earlier. A stronger currency often hurts Japanese stock prices, and Toyota Motor (7203.TO) (7203.TO) went from a fresh two-year high to finishing down 0.2%.

Despite the pullback, the Nikkei nearly reached 24,000.

In Hong Kong, the Hang Seng Index topped 31,000 for the first time since 2007. It was up 0.4%, matching a record 11-day winning streak recorded in 1999.

Fresh multiyear highs were also reached in Singapore, Malaysia and Australia .

But South Korea's Kospi turned lower and fell 0.1% as heavyweight Samsung Electronics (005930.SE) dropped 3.1%. While saying it will post its best-ever quarterly earnings in the fourth quarter, Samsung's projected results were still short of analysts' expectations (http://www.marketwatch.com/story/samsung-expects-record-fourth-quarter-2018-01-08).

Taiwan's Taiex slipped from Monday's 28-year high, declining by less than 0.1%.

Overall, market watchers remained upbeat after last year's broad rallies.

"I am really struggling to find any bad news at the moment," said Rob Carnell, head of research for Asia at ING.

Goldman Sachs noted that "for the first time since 2010, the world economy is outperforming most predictions, and we expect this strength to continue."

(END) Dow Jones Newswires

January 09, 2018 06:20 ET (11:20 GMT)