ASIA MARKETS: Asia-Pacific Stocks Driven Lower By Weaker U.S. Dollar
Nikkei, ASX fall; New Zealand index marks biggest drop since March
Stronger local currencies gave investors a reason to sell equities across parts of the Asia-Pacific on Thursday, amid recent record and multiyear highs
This was most notable in New Zealand. The benchmark NZX-50 closed down 1.4%, recording its lowest finish in a month and biggest daily drop since March.
The weakness, which follows a 0.8% drop Wednesday, comes as the New Zealand dollar is at its strongest in three months against the U.S. dollar.
The declines in the NZX-50 have been led by large-cap stocks dominated by international investors, said Andy Bowley, head of research for Forsyth Barr in Wellington. He added that a pullback isn't entirely unexpected after three straight record closing highs to start 2018.
The New Zealand benchmark gained 22% in 2017, driven by some export-reliant stocks, as well as those popular with overseas investors. That includes a2 Milk (ATM.NZ) , which fell 4.4% after falling 2.9% Wednesday. But its shares nearly quadrupled last year
A stronger local currency also weighed on Japan's stock market. The Nikkei finished down 0.3%. That selling followed a near 1% gain during European trading for the versus the dollar.
The dollar rebounded in Asian trading to Yen111.70. A day earlier, it had been Yen112.35. The yen started strengthening Tuesday, and overnight it hit levels last seen in late November, after the Bank of Japan trimmed its offers to buy government bonds maturing in 10 to 25 years.
It fueled chatter that the central bank may be quietly cutting back asset purchases. But Thursday's BOJ operations saw the bank just make offers on shorter-term debt and at the same levels as previous deals.
Asian stocks have been benefiting from recent commodity-price gains, but there is now "a bit of caution" about equities valuations, particularly in the wake of the yen's gain, said Vishnu Varathan, a senior economist at Mizuho Bank.
Commodities have helped drive Australia's stock benchmark to 10-year highs recently but the market was broadly weaker, with the S&P/ASX 200 finishing lower by 0.5%, extending Wednesday's biggest drop in six weeks.
Stocks weren't helped by news of stronger-than-expected retail sales in November, though the Australian dollar jumped to session highs versus other currencies; it was recently up 0.4% at US$0.7870.
"Any residual expectations for the Reserve Bank of Australia to cut cash rates to encourage the economy have disappeared," said Ric Spooner, chief market analyst at CMC Markets.
Asian markets' main stock indexes were largely seeing modest declines. Hong Kong's Hang Seng posted a record 12th straight gain Wednesday at it marches closer to 2007's all-time high, while the Shanghai Composite marked a record-tying 10th-straight gain.
Oil futures slipped about 0.1% in Asia after hitting fresh three-year highs Wednesday.
Ten-year U.S. Treasury yields fell a bit further in Asian trading, reaching 2.54%, following reports Wednesday that China was considering slowing or stopping purchases of Treasurys in a diversification effort. But China's foreign exchange administration later issued a statement denying it was considering doing such a thing. The 10-year yield got to 2.59% overnight.
(END) Dow Jones Newswires
January 11, 2018 05:58 ET (10:58 GMT)