Asian stocks Thursday were broadly down for a second straight session, continuing a global pullback from recent record and multiyear highs, with some markets pressured by stronger local currencies.
This was most notable in New Zealand. The benchmark NZX-50 NZ50GR, -1.37% closed down 1.4%, recording its lowest finish in a month and biggest daily drop since March. The weakness, which followed a 0.8% drop Wednesday, came as the New Zealand dollar was at its strongest in three months against the U.S. dollar.
However, stocks in Hong Kong and mainland China were again looking to outperform. The Hang Seng Index HSI, +0.15% and the Shanghai Composite COMP, -0.14% both turned slightly higher by midafternoon, as the former looks to log a record-extending 13th-straight gain and the latter seeks a record-tying 10th-consecutive advance.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 New Zealand benchmark have been led by large-capitalization stocks dominated by international investors, said Andy Bowley, head of research for Forsyth Barr in Wellington. He added that a pullback wasn’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, -4.44% , which closed down 4.4% after falling 2.9% Wednesday. Last year, its shares nearly quadrupled.
Japan’s stock market was also weighed down by a stronger local currency. The Nikkei NIK, -0.33% ended down 0.3% after falling as much as 0.8% earlier. That selling followed a near-1% gain during European trading for the yen versus the dollar.
The dollar JPYUSD, -0.194357% rebounded in Asian trading to ¥111.80 from ¥111.30 overnight. A day earlier, it was at ¥112.35. The yen started strengthening Tuesday; overnight, it hit levels most recently seen in late November after the Bank of Japan trimmed its offers to buy government bonds maturing in 10 to 25 years.
The measure fueled chatter that the central bank may be quietly cutting back asset purchases. However, in Thursday’s operations the BOJ just made offers on shorter-term debt, and at the same levels as previous deals.
Thursday’s declines in a number of other Asian markets, including Taiwan Y9999, -0.19% and South Korea SEU, -0.47% were no bigger than 0.2%. Meanwhile, S&P 500 futures were recently up 0.1%.
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 XJO, -0.48% recently down 0.6%, extending Wednesday’s biggest drop in six weeks.
The shares weren’t helped by stronger-than-expected November retail sales data, though the Australian dollar AUDUSD, +0.3953% jumped to session highs against 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.
Elsewhere, bitcoin BTCUSD, -5.98% ell toward its lowest level of the month, briefly dropping below $13,000, according to CoinDesk, after South Korea said it was preparing legislation to ban cryptocurrency trading. The country is one of the world’s biggest cryptocurrency markets by trading volume. In early Asian trading prices had been near $15,000.
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.
Oil futures were down about 0.1% in Asia after hitting fresh three-year highs Wednesday.