Dec. 6, 2017 -- 5:44 a.m. EST (Bloomberg) -- 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 declined. 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, and emerging-market stocks slumped to a two-month low. European bonds followed the U.S. benchmark higher. Sterling weakened as efforts to rescue Brexit talks prompted fresh divisions in the U.K. Cabinet. The euro drifted even as an unexpected rise in German factory orders showed Europe’s largest economy will carry its strong momentum into 2018.
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 wrangling over the American debt ceiling after a Republican plan to avoid a federal shutdown on Saturday were thrown into disarray by infighting.
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.”
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