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GLOBAL MARKETS-Failed tech reboot hits stocks, pound cheers Brexit progress

Published 23/11/2018, 03:44 am
© Reuters.  GLOBAL MARKETS-Failed tech reboot hits stocks, pound cheers Brexit progress
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* European shares slip as miners, banks and tech stocks falter Pound jumps as London and EU agree key Brexit text

* Oil gives up early gains but still well off lows

* Dollar slips in Thanksgiving void, rand jumps after rate hike Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, Nov 22 (Reuters) - Europe's share markets fell back into the red on Thursday, as investor worries about slowing global growth in the face of rising U.S. interest rates and trade tensions outweighed crucial Brexit progress.

Chinese markets had extended their slump in Asia amid the trade war with the United States, and with Wall Street closed later for Thanksgiving and trading therefore lighter than normal, Europe followed suit.

The region also had plenty to keep it busy.

A disappointing batch of company earnings added to the stocks gloom but Italian bonds rallied for a second day as sparring continued over its budget and sterling jumped as London and Brussels agreed wording on a Brexit transition deal. .EU GVD/EUR

The dollar .DXY also edged lower for a second day as traders sold the greenback going into Thanksgiving and after Wall Street had seen Apple shares AAPL.O , which have slumped $280 billion in recent weeks, fail with an attempted rebound. .N /FRX

"I think that the recent moves in equities have largely been about big tech catching up with the rest of the market," said Eoin Murray, the head of investment at Hermes Investment Management.

"Post the (global market) wobbles at the end of January, it has really only been big tech that has run off into the stratosphere ... So this is simply big tech coming back down to earth."

Europe's tech sector duly lost another 0.75 percent, but it wasn't the worst performer. Banks fell as much as 1.6 percent and mining companies and other resources firms dropped nearly 2 percent .SXPP before clawing some ground back. .EU

The falls also reflected the bitter Sino-U.S. trade war, encouraging investors to take money off the table before U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, meet in Argentina next week.

The focus is on whether they can make any progress on their trade feud.

Countries belonging to the G20 group of the world's biggest economies applied 40 new trade restrictive measures between mid-May and mid-October, covering around $481 billion of trade, the World Trade Organization said on Thursday. of the restrictions were tariff hikes, many of them retaliation to steel and aluminium tariffs imposed by U.S. President Donald Trump in March.

But the WTO did not count measures announced since or not yet implemented, and one G20 country had asked for its actions to be omitted from the monitoring report, the WTO said.

RUSH FOR THE BREXIT

With no U.S. trading to look forward to later, traders contented themselves by watching Europe's Brexit drama unfold.

Sterling jumped back up to $1.29 GBP= and 88.50 pence per euro EURGBP= after London and Brussels agreed on a text setting out their post-split ties that EU leaders are expected to endorse at a summit on Sunday. over four months before Britain's departure from the EU, Brexit negotiations and political uncertainty in Britain remain the key drivers for the pound, and many analysts are cautious about its prospects.

"With the UK and EU rushing to dot i's and cross t's on a Brexit deal, there's some support for sterling at the moment and some upward pressure on the front end of the rates market," said Societe Generale (PA:SOGN) strategist Kit Juckes.

"Though it won't take long before we refocus on the challenge facing the Prime Minister in getting House of Commons support for her Brexit deal," he added.

Simon Fraser, the former permanent secretary at the UK foreign office, said he expected British politicians to vote on May's deal on Dec. 10.

"There would be a huge amount of pressure put on members of parliament and I think there is a reasonable chance she would get this through ... if not at the first vote potentially in a second vote," he told a call held by fund manager Amundi.

OIL TOILS

The Brexit text had also seen the euro rise against the dollar which meant the single currency barely budged when ECB meeting minutes showed its policymakers were keen to affirm their plans to cut stimulus at the end of the year.

South Africa's central bank triggered far more action though, as a tight decision to hike interest rate in what had already been a hard to call meeting sent its currency, the rand, up more than 1 percent. ZAR= in emerging economy share markets, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had ended little changed after recovering from an initial wobble.

The index has managed to hold up so far in November after three straight monthly declines, but is on track for its worst annual performance since 2011.

Japan's Nikkei .N225 had finished almost 0.7 percent higher but the ongoing trade and tech jitters saw Chinese shares close 0.4 percent in the red. .CSI300 .SS

"Investors are still wary about whether they'll see further lows, given none of the issues that drove the recent correction have dissipated," said Shane Oliver, Sydney-based head of investment strategy at AMP.

In commodities, China-sensitive metals like copper fell MET/L and oil prices reversed, although they were still above one-year lows touched earlier this week. O/R

U.S. crude CLc1 futures were last down 42 cents at $54.21 a barrel after hitting a one-year low of $52.77 on Tuesday. Brent LCOc1 eased 45 cents to $63.03, off Tuesday's low of $61.71.

Gold rose, with spot prices XAU= at $1,227.60 an ounce.

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