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GLOBAL MARKETS-Stocks take a breather as Brexit, U.S. stimulus talks stall

Published 10/12/2020, 06:29
Updated 10/12/2020, 06:30
© Reuters.
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* MSCI Asia ex-Japan index slips 0.34%; dollar steadies
* S&P 500 futures pare early gains
* Uncertainty around Brexit and stimulus keeps investors
sidelined
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook
SINGAPORE, Dec 10 (Reuters) - Asian equities eased from
record highs on Thursday as stalled U.S. stimulus talks and a
sell-off in tech stocks weighed, while sterling traders sat on a
knife's edge as last-ditch Brexit negotiations yielded only an
agreement to keep talking.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS eased 0.34%. Japan's Nikkei .N225 erased early
losses to trade 0.1% lower. Both are up more than 60% from March
lows. S&P 500 futures EScv1 meanwhile pared early gains and
steadied in Asian afternoon trade.
U.S. Treasuries rose while the dollar =USD slightly eased
after a volatile overnight session in currency markets, with
traders now looking ahead to a European Central Bank monetary
policy meeting. Sterling GBP= teetered at $1.3366 as it awaits
a Brexit resolution.
"We've risen so far so fast that it's making investors
cautious," said Michael McCarthy, chief strategist at
stockbroker CMC Markets in Sydney.
"The fall in tech stocks was a bit of a concern, given that
they've risen in all market weather over the last six weeks, so
to see them come off might signal that we're looking at a short
term corrective move."
A near 2% drop in the Nasdaq .IXIC on Wednesday was driven
by a 1.9% fall in Facebook FB.O shares after U.S. regulators
filed lawsuits alleging the company used its dominance to buy or
crush rivals, harming competition. Meanwhile, S&P Dow Jones Indices said on Thursday it would
remove ten Chinese companies from its equities indices and
several others from its bond indices. This move comes after a Trump administration order to
prohibit purchases by U.S. investors of certain Chinese
securities. Index provider FTSE Russell did the same last week.

TRICKY TALKS
Cautious trading in Asia came amid widespread uncertainty
surrounding long-running U.S. pandemic relief negotiations and
talks between Britain and the European Union over trade
arrangements post Brexit.
U.S. lawmakers approved a stopgap government funding bill on
Wednesday, but were unable to sort out disagreements over aid to
state and local governments that are holding up a broader
spending package. British and EU leaders meanwhile gave themselves until the
end of the weekend to seal a new trade pact, with some $1
trillion in annual trade at risk of tariffs if they can't reach
a deal by Dec. 31, when transition arrangements end. British and European futures slipped marginally in Asia,
with FTSE futures FFIc1 little changed and EuroSTOXX 50
futures STXEc1 down 0.14%.
Investor focus will shift towards a European Central Bank
meeting later on Thursday, where the central bank is expected to
unveil more bond buying and cheap loans. Traders are also looking to see whether the ECB will say
anything about a near 14% rise in the common currency from March
lows, which is hindering Europe's exporters.
"We do not think there will be an explicit talking down of
the euro, but expect ECB Chief (Christine) Lagarde to mention
the central bank is keenly monitoring the currency strength,"
analysts at Singapore's OCBC Bank said in a note.
Elsewhere, faith in the recovery appears to be holding up,
with oil prices steady despite a build-up in U.S. inventories.
Brent crude futures LCOc1 last sat 0.27% firmer at $49.13 a
barrel and U.S. crude CLc1 was up 0.29% at $45.81 a barrel.
O/R
Gold XAU= nursed losses at $1,839 an ounce. GOL/
Treasuries traded firmly owing to uncertainty around U.S.
stimulus wrangling, and the yield on benchmark U.S. ten-year
bonds US10YT=RR fell 1.2 basis points to 0.9278%. US/
"The uncertainty around the timing is less important than
the uncertainty around the overall size of the package, which
depends primarily on the outcome of the Senate runoffs in
Georgia on January 5," Goldman Sachs analysts said in a note.
"For now, our assumption is a $700 billion COVID relief
package," they said, adding it would be upgraded to between $1
trillion and $1.5 trillion if Democrats win the two seats.

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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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