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Asia Markets: Nikkei soars on its first trading day of 2018, hits 26-year high

Asian equities continued to strengthen Thursday, with Japanese stocks surging on their first trading day of 2018 after U.S. indexes rose to fresh records overnight.

The Nikkei Stock Average NIK, +3.26%   closed up 3.3%, hitting a fresh 26-year high and logging its biggest daily gain since Nov. 10, 2016.

Retail investors drove Thursday’s gains, said Takahiro Sekido, a Japan strategist with Bank of Tokyo-Mitsubishi UFJ, boosting their stockholdings with the Japanese economy on strong footing. In addition, the country’s producers and exports are expected to receive support from steady Chinese economic growth, he said.

Foreign investors should finally turn their attention to Japanese stocks, said Kyoya Okazawa, who helps oversee institutional-client operations at BNP Paribas, pointing to the stable global picture and the passing of the U.S. tax reform. A strong global economy is now “enough reason” to invest in Japan, he said, putting the Nikkei’s next resistance level at 25,000.

Gains were more muted elsewhere in Asia. South Korea was an exception, with the Kospi SEU, -0.80% reversing an early advance to end 0.8% lower as index heavyweight Samsung Electronics 005930, -1.05%  fell 1%.

The major stock indexes in New Zealand, the Philippines and Thailand set fresh record highs Thursday, while benchmarks in Malaysia FBMKLCI, +0.59% and Singapore STI, +1.06%  reached their best levels since mid-2015.

Hong Kong and China SHCOMP, +0.49%  outperformed most markets with gains of about 0.5% each, helped by strong economic data. The Hang Seng Index HSI, +0.57%  touched a new 10-year high Thursday and is on track to notch its first eight-day winning streak since July.

Australia’s S&P/ASX 200 XJO, +0.11%   lagged behind regional gains, closing just 0.1% higher despite renewed strength in commodities stocks. Oil companies there rallied after crude CLG8, +0.28%  rose 2% to set three-year highs on Wednesday and extended gains by 0.5% in Asia on Thursday.

The U.S. dollar DXY, -0.23%  rose as minutes from the Federal Reserve’s December policy meeting showed a general commitment to steady interest-rate increases in 2018. The WSJ Dollar Index BUXX, -0.19%  snapped its longest losing streak in four years Wednesday and was steady in Asian trading Thursday.

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