Shanghai plunges, Nikkei climbs for 10th straight day
Latest market news; as the dollar rises, Shanghai plummets and Japan enjoys it's most successful run in a quarter of a century.business Updated: May 28, 2015 15:03 IST
Japan's Nikkei stock index climbed for a 10th straight day Thursday as the dollar advanced to a 12-year high against the yen, but Shanghai plunged after a more than 15 percent surge in the past eight sessions.
Wall Street provided an ideal lead, with the Nasdaq surging to a new record high, while the euro edged up slightly as investors watch snail-pace talks between Greece and its creditors over reforming its bailout with trepidation.
Tokyo rose 0.39 percent, or 78.88 points, to finish at 20,551.46, as a plunging yen drove it to the longest consecutive rally since the heady days of Japan's stock market bubble more than a quarter of a century ago. Seoul added 0.16 percent, or 3.39 points, to 2,110.89.
However, Shanghai slumped 6.50 percent, or 321.45 points, to 4,620.27 on speculation authorities will introduce measures to cool the market's recent rally. Hong Kong tracked the losses, sitting 2.10 percent lower.Sydney ended 0.21 percent, or 12.2 points, lower at 5,713.1.
The dollar has resumed its bull run against the yen on growing expectations that the Federal Reserve will hike interest rates by the end of the year while Japan's central bank is tipped to embark on more monetary easing to kickstart a soporific economy.
The chances of a hike have increased following upbeat US data this week and comments from Fed boss Janet Yellen on Friday that rates would go up "at some point this year".
On currency markets the dollar climbed to 124.30 yen at one point in Tokyo -- its highest since late 2002 -- before paring the gains to 123.90 yen. That compares with 123.63 yen late in New York.
"It's likely that the yen will continue to slowly weaken and we'll have a global risk-on mode, stocks won't rise too quickly but they'll have a steady climb," Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co in Tokyo, said.
"The US economy is OK and as Yellen said recently, the US is trying to raise rates," he said.
The Nasdaq jumped 1.47 percent to another record, the Dow added 0.67 percent and the S&P 500 gained 0.92 percent.
The euro edged up to $1.0938 and 135.26 yen against $1.0906 and 134.83 yen in New York but traders are keeping close tabs on events in Europe as a deadline for Greece to repay some of its debts approaches on June 5.
There are fears, however, that if Athens defaults it could fall out of the eurozone, which would probably pejoratively affect the global markets.
Greek Prime Minister Alexis Tsipras said on Wednesday his country was "in the final stretch" of talks with its EU-IMF creditors on an agreement to release bailout funds that are needed for Greece to service its debts.
However, EU sources said a meeting in Brussels between the two sides had been delayed by several hours, while European Commission Vice-President Valdis Dombrovskis earlier said there were important areas still to be resolved.
In Shanghai, investors sold up as talk emerged of regulatory moves to pour water on stocks, while brokerages also tightened rules on lending.
"There's some talk about the securities regulator ordering banks to report on inflows into stocks and financial products," said Clement Cheng, a Hong Kong-based trader at RBC Investment Management. "Tighter margin lending and an upcoming big week for IPOs constrain some liquidity."
Oil prices edged up after falling Wednesday owing to the stronger dollar. US benchmark West Texas Intermediate for July delivery rose 35 cents to $57.86 while Brent crude for July gained 52 cents to $62.58.Gold fetched $1,188.84 compared with $1,184.80 late Wednesday.