Asia: Stocks follow US lower as yen strengthens

[SYDNEY] Asian stocks followed US equities lower and the yen climbed as investors prepared to close out a volatile year for financial markets. Oil dropped from its highest close in 17 months.

Equities from Hong Kong to Malaysia slumped, with Japanese shares headed toward their biggest drop in more than a month, after the S&P 500 Index fell the most since October as data showed a decline in pending US home sales.

The yen strengthened for a second day as the US dollar fell against most major currencies. Crude futures slipped for the first time in nine days, halting the longest winning streak since 2010. Gold extended gains to a fourth day and government bonds advanced.

Trading has been thin across the globe during the last week of the year, with volumes in crude oil, equities and currencies all below average. Investors sold US equities at the fastest rate since before Donald Trump's surprise election, trimming a post-election rally that took major indexes to all-time highs.

The US dollar rose to the highest level in more than a decade on speculation the incoming president will boost public spending.

"A market riding on expectations toward a Trump presidency is coming to a close, and we're starting to focus on reality," said Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co in Tokyo.

"I expect investors to take a more nervous stance toward US economic indicators from here on."

Stocks

The MSCI Asia Pacific Index fell 0.2 per cent as of 11:30am in Tokyo, after breaking a string of six consecutive losses on Wednesday with a 0.2 per cent gain.

Japan's Topix slid one per cent. The benchmark is heading toward a loss of 1.7 per cent for the year, its first annual decline in five years. The Nikkei 225 Stock Average is poised to continue its winning streak, up 0.9 per cent for 2016. The Shanghai Composite Index slipped 0.3 per cent and Hong Kong's Hang Seng Index retreated 0.4 per cent.

South Korea's Kospi Index dropped 0.1 per cent, adding to Wednesday's 0.9 per cent drop. Australia's S&P/ASX 200 fell 0.1 per cent, down from the highest level since Aug 2015, while New Zealand's S&P/NZX 50 was little changed.

The S&P 500 fell 0.8 per cent to 2,249.92 in New York on Wednesday. It's up 10 per cent in 2016 after adding 2.3 per cent so far this month. The Dow Jones Industrial Average dropped 111.36 points to 19,833.68 Wednesday.

Commodities

Crude futures slid 0.6 per cent US$53.75 a barrel as an industry report was said to show US stockpiles climbed last week. Crude settled at US$54.06 on Wednesday in New York, the highest close since July 2015.

Gold rose for a fourth session, adding 0.6 per cent to US$1,148.66. The metal has been rebounding from an 11-month low.

Currencies

The yen rose 0.3 per cent to 116.86 per US dollar. The Australian dollar climbed 0.2 per cent and the New Zealand dollar was little changed. The Bloomberg Dollar Spot Index slipped 0.2 per cent after trading Wednesday at the highest level in more than a decade.

Bonds Australia's 10-year yield slid eight basis points to 2.78 per cent, while the New Zealand rate was down nine basis points to 3.38 per cent.

BLOOMBERG