Asian stocks extended their New Year rally Tuesday, though Japanese equities pared gains after the Bank of Japan trimmed the size of its bond-repurchase offer in its latest market operation.
The Nikkei NIK, +0.57% advanced 1% in early trading as it caught up with regional gains after a market holiday on Monday. But shares pulled back after the central bank’s decision to cut the size of its offer for bonds maturing in 10 to 25 years by 5% to ¥190 billion ($1.7 billion) sent the yen higher. The index was recently up 0.7%.
Some saw the BOJ’s move as a sign of slight policy tightening.
However, Rodrigo Catril, a currency strategist at National Australia Bank, said the central bank was trying to stop the Japanese bond yield curve from flattening, as the gap between two- and 10-year U.S. Treasurys has reached its narrowest point since the global financial crisis.
ANZ senior strategist Irene Cheung said the yen’s jump was the result of the currency having been heavily shorted of late.
The dollar JPYUSD, +0.386128% was recently at ¥112.65, versus ¥113.15 earlier. A stronger currency often hurts Japanese stock prices, and Toyota Motor TM, +0.68% 7203, -0.15% went from a fresh two-year high to finishing morning trading down 0.8%.
Despite the pullback, the Nikkei hit a fresh 26-year high and nearly reached 24000.
In Hong Kong, the Hang Seng Index HSI, +0.17% topped 31000 for the first time since 2007, putting it 2% from a record closing high. It is also looking to match 1999’s record 11-day winning streak; there have been five 10-day runs since, including the current one.
Fresh multiyear highs were also reached in Singapore, Malaysia and Australia XJO, +0.09%
South Korea’s Kospi SEU, -0.32% rose 0.2%, despite a 1.8% decline in index heavyweight Samsung Electronics 005930, -3.58% . While saying it will post its best-ever quarterly earnings in the fourth quarter, Samsung’s projected results were still short of analysts’ expectations.
Overall, market watchers remained upbeat after last year’s broad rallies.
“I am really struggling to find any bad news at the moment,” said Rob Carnell, head of research for Asia at ING.
Goldman Sachs noted that “for the first time since 2010, the world economy is outperforming most predictions, and we expect this strength to continue.”
In oil futures, U.S. and global benchmarks rose some 0.7% to remain at three-year highs.
And bitcoin BTCUSD, -0.30% pushed back above $15,000 after falling Monday to $14,000 from $16,000, according to data from CoinDesk.