Japan stocks fall for third day after sell off continues in US equities, dollar

The US dollar had its worst January in decades

PUBLISHED : Wednesday, 01 February, 2017, 9:06am
UPDATED : Wednesday, 01 February, 2017, 4:31pm

Asian stocks closed mixed on Wednesday, with Japan posting a third straight day of losses, as selling pressure continued in US equities on worries over US President Donald Trump’s controversial immigration ban and his criticism of Japan and China for “currency devaluations”.

Japan’s Nikkei Average dropped 0.6 per cent to close at 19,148.08. It has fallen 1.6 per cent since the end of last week when Trump signed an executive order temporarily banning immigrants and refugees from seven Muslim-majority countries.

Hong Kong stocks returned from a four-day holiday and ushered in the Year of the Rooster with declines. The Hang Seng Index ended down 0.2 per cent at 23,318.39, and the Hang Seng China Enterprises Index fell 0.5 per cent to close at 9,756.61.

For the past lunar calendar year, the Hang Seng Index jumped 21 per cent, the best performance in seven years.

However, sentiment has turned around after Trump issued on Friday an executive order banning immigrants from seven muslim-majority countries, which spooked investors and sparked sell-offs in equities since Monday. On Tuesday, Trump accused Japan and China for devaluing their currencies to gain a trade advantage against the US, adding to investor concerns about his trade policy.

Elsewhere in Asia-Pacific, Australia’s S&P/ASX 200 rebounded 0.6 per cent to end at 5,653.20. However, it was down 1 per cent so far this week.

South Korea’s Kospi finished at 2,080.48, up 0.6 per cent for the day, but down a combined 0.3 per cent for the past two trading days.

New Zealand’s NZX 50 Index reversed early losses and inched up 0.1 per cent to settle at 7,035.39. Compared with Friday’s closing level, it has dropped 0.9 per cent.

On Wednesday, the ICE US Dollar Index, a key measure of the dollar strength versus six major peers, hovered near its lowest level since November. For the past month, the index had fallen 2.6 per cent, the worst January in three decades, according to Bloomberg data.

The dollar has weakened significantly against the Japanese yen in the past few days. It traded at ‎¥113.53 on Wednesday afternoon, down 1.4 per cent from 115.1 late Friday.