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Global Stock Declines Worsen; Commodities Weigh -- 2nd Update

15 Nov 2017 6:03 am
By Ese Erheriene 

Asian stock declines deepened in afternoon trading Wednesday, as recent global weakness and a pullback in commodity prices reversed some of October's big gains.

The turnaround has been most obvious in Japan, where the benchmark Nikkei Stock Average is set to log a sixth-straight decline. It was down 1.4% ahead of the close. It hasn't had such a run of consecutive drops since May 2016 and comes after the benchmark had a record 16-day winning streak last month.

The Nikkei recently surged 22% in nine weeks, hitting 25-year highs. The size and speed of the move raised questions about how sustainable the surge was as well as when a pullback might happen, and how big it might be. Volatility picked up last Thursday, when the index both rose and fell nearly 2% before finishing little changed.

In all, the benchmark is down 5.6%, or 1,300 points, from last week's intraday high.

Broad declines of more than 1% were seen in Japanese stocks. Oil futures' drop of at least 1.5% Tuesday was followed by a further 1% decrease in Asia on downbeat U.S. inventory figures. Japan Petroleum Exploration and Inpex both dropped more than 4%.

The market's slide also came amid some yen strength. Historically that has been a pressure point for Japan's export-heavy stock market but that correlation has broken down the past several months. The dollar was recently about Yen113.20, earlier nearing Yen113, after almost reaching Yen114 in late-Tuesday Asian trading.

In-line economic growth in the third quarter seemingly didn't impact Japanese markets. The country has now gone nearly two years without contraction, the longest since 2001.

Chinese stocks were also down sharply Wednesday, especially in the country's south as the Shenzhen Composite fell 1.4% and the largely small-cap ChiNext slid 1.6% at early afternoon before rebounding some. The broader weakness built on equities declines Tuesday that followed the release of muted October economic data.

That helped pressure metals futures there, with iron ore sliding 4%.

But Wednesday's stock weakness also came amid fears of escalating financial regulations, which have already seen jitters in the bond market in recent days. The 10-year government-bond yield briefly topped 4% this week for the first time in three years. That could result in some funds chasing safer returns, said Shen Zhengyang, an analyst at Northeast Securities.

Benchmarks in Hong Kong and Singapore were recently off nearly 1% while Taiwan and Australia saw roughly 0.5% declines. Taiwan Semiconductor fell 1% and Hon Hai, also known as Foxconn Technology, slid nearly 2.5% after its quarterly report, with Daiwa downgrading the Apple supplier to hold and cutting its stock target 17%.

Yifan Xie contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

November 15, 2017 01:03 ET (06:03 GMT)

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