Stocks Slump as Risk-Off Takes Hold; Bonds Advance: Markets Wrap: Bloomberg

  • Tech shares, basic resources lead decline; EM equities tumble
  • Gold and yen strengthen; pound retreats as Brexit talks go on

European shares followed their Asian counterparts lower as investors continued to lock in gains in the year’s better performing assets amid a broad risk-off mood. The dollar steadied and Treasuries climbed as focus turns to efforts to avert a U.S. government shutdown on Saturday.

The Stoxx Europe 600 Index dropped a second day as technology and basic resource shares led the decline. In Asia, Japanese equities fell sharply as the yen rose, and Hong Kong’s Hang Seng Index slumped. The MSCI Asia Pacific Index is set to fall for the eighth day, the longest run of losses since 2015. European bonds followed the U.S. benchmark higher. Sterling weakened as efforts to rescue Brexit talks prompted fresh divisions in the U.K. Cabinet.

Global markets have succumbed to a bout of profit taking this week as traders move out of some of 2017’s biggest winners, including technology shares and emerging market equities. The selloff comes as investors assess U.S. tax reform developments and attempts by House Republican leaders to quell a rebellion within their ranks over a stopgap spending bill needed to avert a partial government shutdown on Saturday.

Investors are “locking in profits earlier than usual for the year and not opening any new positions,” said Andrew Clarke, director of trading at Mirabaud (Asia) Ltd. “Eventually, as profit taking subsides, buying for the new year will appear as people look toward 2018.”

Elsewhere, oil edged lower after industry data showed U.S. gasoline stockpiles expanded for the first time in four weeks. Australia’s dollar dropped and bonds rose as slower-than-expected growth spurred traders to delay their expectations on interest-rate increases.

Terminal customers can read more in our Markets Live blog.

Here are some of the key events facing markets in the coming days:

  • The European Commission College of Commissioners discusses Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship.
  • The U.S. faces a partial government shutdown after money runs out on Dec. 8 if Congress can’t agree on a spending bill by then.
  • U.S. employers probably hired at a robust pace in November as the unemployment rate held at an almost 17-year low. The Labor Department’s jobs report Friday may also show a bump up in average hourly earnings.

These are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index fell 0.9 percent as of 8:10 a.m. London time to the lowest in three weeks.
  • The U.K.’s FTSE 100 Index declined 0.4 percent to the lowest in 10 weeks.
  • Germany’s DAX Index sank 1.3 percent.
  • Japan’s Nikkei 225 Stock Average decreased 2 percent to the lowest in three weeks.
  • The MSCI Asia Pacific Index decreased 1.3 percent to the lowest in almost six weeks.
  • The MSCI Emerging Market Index dipped 1.6 percent to the lowest in two months.
  • Futures on the S&P 500 Index dipped 0.2 percent to 2,622.50, the lowest in more than a week.

Currencies

  • The Bloomberg Dollar Spot Index gained less than 0.05 percent to the highest in more than two weeks.
  • The euro increased less than 0.05 percent to $1.1827.
  • The British pound fell 0.3 percent to $1.3398, the weakest in more than a week.
  • The Japanese yen climbed 0.4 percent to 112.14 per dollar, the strongest in a week.

Bonds

  • The yield on 10-year Treasuries declined one basis point to 2.34 percent, the lowest in more than a week.
  • Germany’s 10-year yield fell two basis points to 0.30 percent, the lowest in more than five months.
  • Britain’s 10-year yield decreased two basis points to 1.234 percent.
  • Japan’s 10-year yield increased one basis point to 0.055 percent, the highest in five weeks.

Commodities

  • West Texas Intermediate crude declined 0.2 percent to $57.50 a barrel.
  • Gold gained 0.2 percent to $1,268.49 an ounce.
  • Copper rose 0.5 percent to $2.96 a pound.
Source: Bloomberg

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