Asian shares decline as Wall Street rally fades

Youkyung Lee, The Associated Press</span>
Published Thursday, January 11, 2018 12:51AM EST

SEOUL, Korea, Republic Of - Asian stock markets were lower on Thursday after Wall Street posted its first loss this year. Reports that China may slow its purchases of U.S. government bonds weighed on investor sentiment.

KEEPING SCORE: Japan's Nikkei 225 fell 0.3 per cent to 23,707.31 and South Korea's Kospi retreated 0.6 per cent to 2,485.75. Hong Kong's Hang Seng index dipped 0.1 per cent to 31,032.51 while China's Shanghai Composite Index fell 0.5 per cent to 3,405.93. Australia's S&P/ASX 200 slumped 0.6 per cent to 6,057.10. Most stock markets in Southeast Asia were weaker.

CHINA: A report from Bloomberg News said China is considering slowing or halting its purchases of U.S. Treasurys, which helped push yields higher. The report triggered sell-offs of U.S. government bonds and the yield on the 10-year Treasury reached its highest level since March at one point before pulling back.

ANLAYST'S TAKE: "Justifiably, Beijing's biggest worry is that the value of its U.S. bond holdings will be eroded substantially by rising inflation and supply," Mizuho Bank Ltd. said in a daily commentary. "Doubts about (U.S. bonds) allure should not be overblown as threat of imminent dumping."

JAPAN: Bank of Japan unexpectedly cut its purchases of long-dated Japanese government bonds, sending the Japanese yen higher. Bank of America Merrill Lynch said in a report that the market reaction was "a bit excessive" and perhaps more extreme than expected, highlighting the importance of communication going forward.

WALL STREET: U.S. stocks finished lower on Wednesday. The Standard & Poor's 500 index fell 0.1 per cent to 2,748.23. The Dow Jones industrial average dropped 0.1 per cent to 25,369.13 while the Nasdaq composite fell 0.1 per cent to 7,153.57. The Russell 2000 index of small-cap stocks slipped 0.30 points, or less than 0.1 per cent, to 1,559.80.

CURRENCIES: The dollar rose to 111.73 Japanese yen from 111.43 yen. The euro was flat at $1.1948.

OIL: Benchmark U.S. crude lost 3 cents to $63.54 per barrel on the New York Mercantile Exchange. The contract added 61 cents to settle at $63.57 per barrel on Wednesday. Brent crude, the international standard, fell 10 cents to $69.10 per barrel in London. It gained 38 cents to $69.20 a barrel on Wednesday.

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