ASIA MARKETS: Asian Markets Waver Into The Close As Dollar Slides

By FeaturesDow Jones Newswires

Nikkei slips after 26-year high; Taiex snaps 8-session winning streak

Asian stocks closed mixed after steadying in afternoon trade on Wednesday, with Chinese and Hong Kong equities climbing and Japan trimming its declines.

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The region's markets have had a strong run recently -- part of this month's global equities rally -- but were hit with some weakness early on Wednesday as the dollar slumped to a three-year low (http://www.marketwatch.com/story/dollar-plunges-to-3-year-low-after-mnuchin-cheers-weaker-greenback-2018-01-24).

The latest bout of weakness "is more from a sense that people are getting uncomfortable with rising trade tensions," said Terence Wu, a forex analyst at OCBC Bank in Singapore. In general, "everyone seems to be looking for an opportunity to sell the dollar."

A potential U.S. trade war began this week, with President Donald Trump's move to slap import tariffs on largely Asian solar panels and washing machines. But some don't anticipate far-reaching impacts.

"The latest measures are small in the broad context of U.S. trade and we do not anticipate a serious escalation," said Daniel Morris, a senior investment strategist at BNP Paribas Asset Management.

Taiwan's Taiex led the declines in the region, falling 0.9%, after recording its second eight-session winning streak in the past month on Tuesday. Taiwan Semiconductor (2330.TW)--which had risen 13% over the past eight days, helped by upbeat fourth-quarter results -- ended down 3%, while smartphone-lens maker Largan Precision (3008.TW) slumped 4.4%.

But Hong Kong's Hang Seng turned slightly higher after the midday break to close up 0.1%, reversing an early decline of more than 0.5%. Chinese benchmarks in Shenzhen, where generally smaller companies are listed, also reversed morning drops.

Equities in Hong Kong and Shanghai, where most of China's bigger companies are listed, have gone nearly straight up the past month, with the Hang Seng up 22 of the last 24 days through Tuesday and the Shanghai Composite up 17 of the past 18. While the latter notably lagged behind in 2017 by rising just 6.6%, the Hang Seng was among the world's best in jumping 36%.

Japan's Nikkei ended 0.8% lower after its latest 26-year high Tuesday, held back by the dollar's declines against the yen . The greenback bought Yen109.44 compared with Yen110.31 on Tuesday.

Export stocks were weak in Japan, as is often the case when the yen strengthens. Japanese banks also fell as U.S. Treasury prices rebounded after weeks of steady declines. When bond prices rise, their yields fall, and that tends to hurt banks' earnings.

A weaker dollar can make U.S. products more attractive to overseas customers and international ones less so to U.S. buyers as their price goes up.

New Zealand and Australian equities were a bright spot Wednesday in the Asia-Pacific region, with the NZX-50 closing 0.2% higher and Australia's benchmark ending up 0.3%.

(END) Dow Jones Newswires

January 24, 2018 06:49 ET (11:49 GMT)

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