European and Asian shares stepped back from eight-month highs on Thursday as investors took money off the table amid fresh concerns about U.S.-China trade talks and as dire data from Germany signaled trouble for Europe.
Germany’s figures showed industrial orders fell at their sharpest rate in more than two years in February driven largely by a slump in foreign demand.
It compounded signs that Europe’s largest economy has had a feeble start to the year and left the euro stuck at 1.12 dollar, sent German Bund yields back below zero in the bond market and ended a four-day run of gains for share traders.
MSCI’s broadest index of Asia shares also lost 0.4 per cent overnight after five straight days of gains had taken it to the highest level since late August.
Losses were led by Australia and New Zealand, while Hong Kong, the Philippines and Indian markets were also in red.
Chinese shares were firmer with the blue-chip index up 0.6 per cent, while Japan’s Nikkei paused near a recent one-month top.
Analysts pointed to investor fatigue and a lack of fresh headlines on the Sino-U.S. trade talks for Thursday’s sell-off, while disappointing U.S. economic data this week also weighed on sentiment.
“We are expecting quite a constructive agreement between the U.S. and China when it comes to trade,” said AllianceBernstein China Portfolio Manager John Lin.
He added it was probably now a consensus view among major investors and if it proved right, would raise other questions such as whether China’s government would “keep its foot on the (stimulus) pedal or ease off a bit.”
Risk sentiment has otherwise been supported this week by signs of progress in Sino-U.S. trade talks.
White House economic adviser Larry Kudlow said on Wednesday the two sides aimed to bridge differences during talks which could extend beyond three days this week.
Investors are keen to see if ongoing talks lead to an earlier-than-anticipated meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping to sign an accord.