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.
The Hang Seng Index was recently up 1.4% at 31770, rebounding from a Monday afternoon selloff that ended the index's record 14-day winning streak. Strong afternoon selling in mainland Chinese stocks, especially in Shenzhen, fueled Monday's pullback.
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The ChiNext Price Index, which tracks new-economy stocks in Shenzhen, fell 0.4% after the lunch break, extending its 3% decline on Monday. But it didn't hurt the broader market, with the Shanghai Composite Index--which saw its record 11 straight days of gains end Monday--gaining 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 hurt 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 said. "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, Mr. Hao said.
Japanese stocks also rebounded Tuesday as the yen pulled back. With the dollar climbing to Yen110.90 from Yen110.50 earlier, the Nikkei finished up 1% to log its latest 26-year closing high.
Taiwan logged another 28-year record and New Zealand's NZX 50, which rose in each month of 2017, closed 0.5% higher on bargain hunting, snapping a four-day losing streak fueled by currency concerns.
But Australia's S&P/ASX 200 ignored regional gains, shedding 0.5% as the country's large miners cooled and the utilities sector extended declines, falling 1.3% to its lowest level since October.
Rio Tinto, which had surged 19% in five weeks, dropped 0.7% after hitting a fresh 6 1/2 -year high in early trading on record production figures for 2017. BHP Billiton, which had risen on stronger commodities prices partly driven by the U.S. dollar's recent weakness, closed 0.8% lower as iron-ore prices fell.
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 were recently up 0.3%.
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 0.4% at $69.99 a barrel.
Meanwhile, bitcoin slid in Asian trading ahead of the expiration of Cboe futures Wednesday, the first since trading started last month. Prices were around $13,100, according to CoinDesk, versus $14,300 midday Monday in the U.S.
(END) Dow Jones Newswires
January 16, 2018 02:18 ET (07:18 GMT)
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