Asia shares take a breather, dollar sold anew

SYDNEY (Reuters): Asian share markets took a time out on Wednesday as investors were left breathless at the breakneck pace of recent gains, while a fresh burst of speculative selling took the U.S. dollar to three-year lows.

Most Asian stock indices are up anywhere from 5 to 10% since the start of the year with many at all-time highs.

“These markets are absolutely flying and have had seemingly one-way moves since late December,” noted Chris Weston, chief market strategist at broker IG.

“There has clearly been a wall of capital hitting these markets, as is the case with many Asian currencies,” he added. “One simply can’t rule out further upside here, even if there are growing risks of buyers’ fatigue kicking in.”

Early Wednesday, MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2%, having jumped 1.2% on Tuesday to an all-time peak.

Japan’s Nikkei edged down 0.6% as the yen strengthened, though that was from a 26-year top.

Figures out of Japan showed exports growing for a 13th straight month, led by record demand from China and Asia as a whole, while manufacturing activity expanded at the fastest pace in almost four years.

Investors seemed to have largely shaken off worries about a trade war, sparked when U.S. President Donald Trump’s slapped steep import tariffs on washing machines and solar panels in a move condemned by China and South Korea.

Korea’s main index was flat, while China’s blue-chip CSI300 index dipped 0.3%. The latter is still up more than 8% on the year so far and near its highest since mid-2015.

On Wall Street, a 10% surge in Netflix led gains across the tech sector as it became just the latest to top forecasts. So far, 82% of reporting companies having beaten estimates.

The Nasdaq ended Tuesday with gains of 0.71% and the S&P 500 0.22%, while the Dow edged down a tiny 0.01%.

Europe on a roll

In currency markets, the dollar remained under fire as investors wagered the Federal Reserve would be far from the only central bank to tighten this year as growth spread more widely.

The sea change has been greatest in Europe where a survey of consumers overnight showed confidence jumped to a 17-year high in January.

“Both investors and consumers in Europe have started 2018 in a cheery mood, as the rotation away from the U.S. as the epicentre of global growth continues,” said ANZ analyst Richard Yetsenga in a note to clients.

The upbeat data only reinforced speculation the European Central Bank might take a step toward an eventual tightening at its policy meeting on Thursday.

That helped lift to euro to $1.2315 and back toward the three-year top of $1.2322 touched last week. The dollar was already at a fresh three-year trough against a basket of major currencies at 90.003.

It also ran into selling against the yen even though the Bank of Japan tried hard on Tuesday to quash talk it might curb its massive asset buying campaign anytime soon.

Nikkei takes breather after hitting 26-year high

TOKYO (Reuters): Japan’s Nikkei share average took a breather on Wednesday morning after rising to a fresh 26-year high in the previous session, as weakness in exporters such as Murata and Fanuc offset gains in real estate stocks.

The Nikkei dropped 0.4% to 24,021.73 in midmorning trade, after touching 24,129.34 on the previous day, the highest level since November 1991.

Murata Manufacturing shed 1.5% and Fanuc Corp tumbled 2.1%.

Banking shares also lost ground, with Mitsubishi UFJ Financial Group down 1.4% and Sumitomo Mitsui Financial Group off 1.5%.

On the other hand, stocks sensitive to domestic-demand such as real estate companies soared. Mitsui Fudosan surged 2.2% and Mitsubishi Estate advanced 1.5%.

The broader Topix shed 0.3% to 1,905.55.