Dollar steadies in Asian trading; Australian stocks fall
Asian equity markets on Tuesday found their footing after some initial softness, leaving Hong Kong's benchmark at a record closing high.
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The Hang Seng rose 1.8% to 31,904.75, topping the previous high set on Oct. 30, 2007. Read:Hong Kong's Hang Seng closes at record high (http://www.marketwatch.com/story/hong-kongs-hang-seng-closes-at-record-high-2018-01-16-34853013)
Japanese stocks rebounded from Monday's selloff, with a weaker yen helping the country's exporters. The dollar gained 0.2% to Yen110.7200, pushing the Nikkei to finish up 1% at a fresh 26-year high.
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."
In China, the Shanghai Composite rose 0.8%, and the Shenzhen Composite added 0.7%. There was strong selling in mainland Chinese stocks during Monday's session.
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.
Taiwan's Taiex gained 0.3% to log another 28-year record, and New Zealand's NZX 50 closed 0.5% higher after four days of losses.
In Australia, the S&P/ASX 200 slid 0.5%, with mining companies falling as metals prices lost some of the dollar-driven gains they made Monday. Rio Tinto (RIO) closed 0.7% down, despite hitting a 6 and a half-year high earlier in the day after posting record production figures for 2017 (http://www.marketwatch.com/story/rio-tinto-sees-record-quarterly-iron-ore-shipments-2018-01-16). Sector peer BHP Billiton (BHP.AU) closed 0.8% down.
(END) Dow Jones Newswires
January 16, 2018 07:03 ET (12:03 GMT)