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Global equities dip on questions about Brexit, US tax talks

Dec 06 2017 07:41

New York - Global stocks retreated on Tuesday on anxiety over Brexit negotiations and debate between the US House and Senate over the massive tax overhaul as some investors took profits after big gains.

Most major bourses finished modestly lower, including those in Frankfurt, Paris, London, New York and Tokyo.

Talks between British and EU leaders remained in limbo after Arlene Foster, leader of the pro-British Democratic Unionist Party (DUP), objected to British Prime Minister Theresa May's position on the future of Northern Ireland's border with eurozone member Ireland.

"The text only came through to us late yesterday morning. Obviously once we saw the text, we knew that it was not going to be acceptable," Foster told Irish public broadcaster RTE.

May is widely expected to return to Brussels on Wednesday or Thursday, with the EU warning that Sunday is the latest if she wants leaders to approve the opening of Brexit trade talks at a summit on December 14 to 15.

Doubts were also creeping onto Wall Streets in anticipation of haggling between Senate and House Republicans over the US tax cut proposal.
The House and Senate still must reconcile their different versions of the tax package, and Maris Ogg of Tower Bridge Advisors, said the current "wait-and-see mode" on Wall Street will shift only when there are clear signs of progress from Congress.

"Every time you get good news it reacts, and when there is no news or bad news, you just tread water," she told AFP.

Meanwhile, the Treasury Department's Office of Financial Research - an agency that monitors market and financial system stability - warned of mounting danger that stocks and bonds could see a "large correction."

Market risks are "high and continue to rise," the report said, noting that cyclically adjusted, the S&P's price-earnings ratio is in the 97th percentile relative to the last 130 years.

In Asian trading, a tech selloff continued with shares in giants Samsung and Tencent sliding sharply, following the downturn on US markets on Monday.

"The high-tech sell-off has worsened overall sentiment," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities.

"Investors seem to be rebalancing (their portfolios) to take profits towards the end of the year, moving out of high-performing technology and health-care issues into financial stocks that are likely to fare well next year," Matsuno told AFP.

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equities  |  markets  |  global stocks

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