ASIA MARKETS: Asian Stocks Bounce Back, Hang Seng Aims For A Record

By FeaturesDow Jones Newswires

Dollar steadies in Asian trading

Asian equity markets found their footing after some initial softness, as Hong Kong's benchmark attempts for a second day to set a record closing high.

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The Hang Seng ended morning trading up 1.3% at 31751.60, rebounding from a Monday afternoon selloff that ended the index's record 14-day winning streak.

Fueling Monday's pullback was strong afternoon selling in mainland Chinese stocks, especially in Shenzhen . The ChiNext Price Index , which tracks new-economy stocks there, fell 3% Monday, the most since November. It ended Tuesday morning trading up 0.1%, while the Shanghai Composite , which saw its record 11 straight days of gains end Monday, rose 0.2%.

The rapid pace of rule changes by the China Securities Regulatory Commission to rein in lending in the country's unruly shadow banking sector has impacted investor confidence, said Hao Hong, head of research and strategy at Bank of Communications.

"The CSRC has been coming out with new rules during the weekend and sometimes during the week as well. This is quite unusual," he noted. "By tightening up peer-to-peer lending, internet financing and all that, we're seeing reduced credit in the system."

The People's Bank of China has injected liquidity into the financial system the past few days to keep markets steady after several weeks on the sidelines, added Hao.

Japanese stocks also rebounded Tuesday as the yen pulled back some. With the dollar climbing to Yen110.90 from Yen110.50 earlier, the Nikkei was recently up 0.6%.

Currency concerns had also been weighing on New Zealand equities, helping cause a four-day losing streak. But the NZX 50 closed up 0.5%. The index rose each month of 2017.

But Australia's S&P/ASX 200 shed 0.2% as the country's large miners cooled and the utilities sector extended declines, falling more than 1% to its lowest level since October.

Rio Tinto(RIO) (RIO) which had surged 19% in five weeks, was recently down 0.5% after hitting a fresh 6 1/2 -year high in early trading on record production figures for 2017 (http://www.marketwatch.com/story/rio-tinto-sees-record-quarterly-iron-ore-shipments-2018-01-16). BHP Billiton (BHP.AU) , (BLT.LN) (BHP.AU) which had risen on stronger commodities prices partly driven by the U.S. dollar's recent weakness, dropped 0.6% Tuesday.

The U.S. dollar steadied in Asian trading after hitting a fresh three-year low Monday, when U.S. markets were closed for a holiday. S&P 500 futures , meanwhile, were recently up 0.2%.

Despite selling in the dollar having stopped for now, the currency "can't find a friend at the moment in the market," said Chris Weston, chief market strategist at IG Markets. "There's a wave of capital moving out of the U.S." amid factors including the market pricing in a more-aggressive pace of interest-rate increases in Europe than the U.S.

Michael J. Howell, managing director at CrossBorder Capital, said "money that rushed into the U.S. mid-decade is set to get pulled out, potentially sending the ICE Dollar Index down another 5% to 10% this year." The dollar was helped by "whopping flows of 'flight' capital" from 2014 to 2016, he added, "largely from China, emerging markets and the eurozone."

Oil prices , hitting three-year highs of late in part on the dollar's declines, pulled back in Asia. The global Brent benchmark was recently down 0.3% at $70.06 a barrel.

Meanwhile, bitcoin slid in Asian trading ahead of the expiration of Cboe ednesday, the first since trading started last month. Prices are around $12,900, according to CoinDesk, versus $14,300 midday Monday in the U.S. The CoinDesk Price Index was last down 3.5% after hitting an intraday low of $12,763.

(END) Dow Jones Newswires

January 16, 2018 01:11 ET (06:11 GMT)

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