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Asia stocks pressured by Wall Street losses

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Syndicated News
Written by Syndicated News

TOKYO, Dec 6 2017 : Asian stocks slipped today, pressured by losses on Wall Street as the technology sector stuttered yet again after a brief rebound, while the dollar sagged on lower long-term U.S. yields.

MSCI’s broadest index of Asia-Pacific shares outside Japan inched down 0.2 percent.

Australian stocks and South Korea’s KOSPI .KS11 were down 0.2 percent, respectively. Japan’s Nikkei .N225 lost 0.5 percent.

The S&P 500 information technology index barely rose overnight as it gave up much of the 1.4 percent intraday gains. The year’s top-performing sector was still down nearly 4 percent over the past week, with investors shifting money to banks, retailers and other stocks seen as likely to benefit the most from tax cuts promised by U.S. President Donald Trump.

As a result the S&P 500 .SPX fell for the third straight session overnight. The Dow .DJI and Nasdaq .IXIC also retreated.

“The main focal point for emerging market equities is how U.S. yields move towards the year end. The Federal Reserve’s monetary policy stance for next year bears close watching due to its impact on U.S. yields, and in turn the various equity markets.”

Fed funds futures prices showed that investors see a rate increase at Federal Reserve’s Dec. 12-13 meeting as a done deal and much of the focus is on the outlook for rates in 2018 and beyond.

The two-year Treasury yield reached a nine-year high overnight as the market increasingly expected the U.S. Congress to pass tax reform legislation and the Fed to tighten policy.

But the 10-year Treasury yield fell overnight, flattening the yield curve further. The curve has flattened as investors see limited room for long-term U.S. inflation.

The dollar dipped, weighed by sagging long-term U.S. yields. The dollar index against six major currencies slipped 0.05 percent to 93.337.

The greenback dipped 0.1 percent to 112.470 yen JPY= and the euro was little changed at $1.1824 EUR= after shedding 0.35 percent the previous day.

The pound extended overnight losses and last stood at $1.3412 GBP=D3 for a loss of 0.2 percent. It came under pressure after Sky News said that a plot to assassinate Prime Minister Theresa May has been foiled.

Sterling had fallen to as low as $1.3370 yesterday on disappointment after May failed to clinch a deal to open talks on post-Brexit free trade with the European Union.

In commodities, U.S. crude oil futures were down 0.3 percent at $57.44 per barrel after American Petroleum Institute data showed that U.S. gasoline stocks and distillate inventories rose more than expected last week. – Reuters

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Syndicated News

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