Tech Slide Spreads; Pound Rises on Brexit Optimism: Markets Wrap

Hong Kong and South Korean-listed shares tumbled, while Japan’s fluctuated before closing higher. Australian shares fell, with lenders declining after the government announced an inquiry into banks. A measure of technology companies was the the biggest drag on the MSCI Asia Pacific Index, which trimmed monthly gains. U.S. tech stocks slumped overnight, signaling a rotation away from the year’s leaders into financial stocks, perhaps prompted by the shape of tax legislation in Congress.

Senate Republicans voted to begin the debate on their sweeping tax-overhaul bill. Optimism the Senate will pass cuts to corporate taxes is buoying sentiment for corporate earnings growth, with Federal Reserve Chair Janet Yellen’s comments that economic growth is “increasingly broad based” adding to enthusiasm for economic expansion.

Meanwhile, questions are being raised about how long the markets’ rally can be sustained. Goldman Sachs Group Inc. said that the prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, which eventually will lead to a bear market. And Credit Suisse Group AG said that the bull run may be entering the last stretch, before petering out in the second half of 2018. They join Morgan Stanley in warning that next year won’t be easy for equity investors.

In Asia, the Bank of Korea raised its key interest rate to 1.5 percent from 1.25 percent, the first hike in more than six years. Japan’s industrial production picked up in October from a year earlier, the 12th consecutive month of gains, underpinned by exports, which are performing at their best since the global financial crisis.

China’s official factory gauge unexpectedly rose as global demand for products helped cushion the effects of a pollution cleanup as officials order polluting mills to shut down or reduce production during winter.

The kiwi dollar took a hit after New Zealand business confidence slumped to the lowest since 2009. Elsewhere, oil rose before OPEC meets to decide on prolonging supply cuts past the end of March.

Here are some key events scheduled for the remainder of this week:

Japan’s CPI may show a sharp divergence between headline and core inflation, Bloomberg Intelligence said ahead of the releases on Friday. In China, the private Caixin manufacturing PMI is due on Friday. India updates on third-quarter GDP on Thursday. OPEC meets in Vienna on Thursday.

These are the main moves in markets:

Stocks

Euro Stoxx 50 futures rose 0.1 percent in early European trading. Futures on the S&P 500 Index were flat. The underlying gauge closed little changed Wednesday. The Nasdaq Composite Index dropped 1.3 percent and the FANG stocks posted the biggest plunge in almost two years. Japan’s Topix index rose 0.3 percent at the close in Tokyo, with financials underpinning gains. The Nikkei 225 Stock Average advanced 0.6 percent. Australia’s S&P/ASX 200 Index finished the session with a 0.7 percent decline. The nation’s biggest banks were the main drag on the benchmark after Prime Minister Malcolm Turnbull said he would hold a wide-ranging public inquiry into the banks. South Korea’s Kospi index dropped 1.4 percent. Hong Kong’s Hang Seng Index fell 1.5 percent and looks set to drop for a fourth day, with Tencent Holdings Ltd. among the biggest decliners after the U.S. tech selloff. The MSCI Asia Pacific Index was down 0.9 percent, paring back its 11th monthly advance.

Currencies

The Bloomberg Dollar Spot Index was steady. The yen traded in a narrow range and was down 0.3 percent at 112.24 per dollar. The South Korean won fell 1 percent to 1,087.98. The New Zealand dollar declined 0.5 percent to 68.48 U.S. cents. The euro rose 0.2 percent to $1.1871. Sterling jumped 0.3 percent to $1.3454. The Times reported that Dublin and London are close to an agreement on the Irish border, moving closer to a Brexit deal. Bitcoin was back above $10,000 after a tumultuous session.

BondsThe yield on 10-year Treasuries was steady at 2.38 percent after climbing six basis points. German 10-year bund yields rose one basis point to just under 0.40 percent.

Commodities

West Texas Intermediate crude was up 0.2 percent at $57.44 a barrel. It fell 1.2 percent in the previous session. Gold was little changed at $1,282.82 an ounce.