Asian markets fall on dollar’s weakness

Thanks; Kenan Machado

Published; Jul 17, 2017 11:24 pm ET

Nikkei dips below 20,000; Chinese stocks stable after Monday’s losses

The dollar was falling against the yen Tuesday.

Asian shares were broadly weaker Tuesday, with Chinese stocks stabilizing after Monday’s slump and Japanese stocks falling in reaction to the dollar’s weakness.
Tokyo investors returned from their Monday holiday and sold shares in reaction to the slide in the dollar on Friday after disappointing U.S. economic data added to skepticism about more Federal Reserve rate increases this year.

The dollar has continued to weaken with the euro getting above $1.15 for the first time in 14 months in Asian trading.
The Nikkei JP:NIK-0.63% fell 0.9% to below the psychologically-important 20,000 level as the dollar JPYUSD+0.51% slid to ¥112.20 Tuesday morning, from ¥112.63 in late New York trading on Monday. Exporters were among the biggest decliners in Japan because their offshore earnings are eroded by the yen’s strength.
The Wall Street Journal Dollar Index fell 0.3%.
Stocks of Japanese insurers also lagged as bond yields fell, as has been the case in recent days. Dai-ichi Life JP:8750-2.79% and Mitsubishi UFJ JP:8306-2.12% slid at least 2% Tuesday.
Market participants are looking to policy statements on Thursday from both the Bank of Japan and the European Central Bank.
Investors are expecting hawkish comments from the ECB, says Hisao Matsuura, chief strategist at Nomura Japan. A hawkish ECB could hurt Tokyo stocks as it could keep the dollar weak and lift the yen, as well as widen the gap between the European and Japanese bond yields, making it more difficult for the BOJ to keep rates low. “I don’t see any upside [for stocks] for now,” he added.
Meanwhile, Chinese stocks were holding up after sharp declines on Monday which saw the Shenzhen Composite Index closing down 4.3% and Shanghai Composite Index down 1.4%. The Shanghai Composite CN:SHCOMP-0.35% was recently down 0.3% while the Shenzhen Composite CN:399106-0.48% was up 0.1%.
Australian stocks, which lagged the stock gains seen in much of Asia Pacific on Monday, were the worst performing in the region Tuesday morning. The S&P/ASX 200 index AU:XJO-1.23% was down 1%, as the country’s big banks, which are heavily weighted on the index, weakened over 2%.

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