U.S. pandemic relief negotiations and Brexit talks weigh on asian markets

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Asian equities eased from record highs on Thursday as stalled U.S. stimulus talks and a sell-off in tech stocks weighed, while sterling traders sat on a knife’s edge as last-ditch Brexit negotiations yielded only an agreement to keep talking.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.34%. Japan’s Nikkei erased early losses to trade 0.1% lower. Both are up more than 60% from March lows. S&P 500 futures meanwhile pared early gains and steadied in Asian afternoon trade.

U.S. Treasuries rose while the dollar slightly eased after a volatile overnight session in currency markets, with traders now looking ahead to a European Central Bank monetary policy meeting. Sterling teetered at $1.3366 as it awaits a Brexit resolution.

“We’ve risen so far so fast that it’s making investors cautious,” said Michael McCarthy, chief strategist at stockbroker CMC Markets in Sydney.

“The fall in tech stocks was a bit of a concern, given that they’ve risen in all market weather over the last six weeks, so to see them come off might signal that we’re looking at a short term corrective move.”

A near 2% drop in the Nasdaq on Wednesday was driven by a 1.9% fall in Facebook (NASDAQ:FB) shares after U.S. regulators filed lawsuits alleging the company used its dominance to buy or crush rivals, harming competition.

Meanwhile, S&P Dow Jones Indices said on Thursday it would remove ten Chinese companies from its equities indices and several others from its bond indices.

This move comes after a Trump administration order to prohibit purchases by U.S. investors of certain Chinese securities. Index provider FTSE Russell did the same last week.

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Cautious trading in Asia came amid widespread uncertainty surrounding long-running U.S. pandemic relief negotiations and talks between Britain and the European Union over trade arrangements post Brexit.

U.S. lawmakers approved a stopgap government funding bill on Wednesday, but were unable to sort out disagreements over aid to state and local governments that are holding up a broader spending package.