SYDNEY (REUTERS) - Asian shares paused at decade peaks and the US dollar dipped on Wednesday (Nov 8) amid concerns Republican plans for major US tax cuts were running into headwinds even before the Senate releases its own version of the proposals.
Investors were also keeping a wary eye on Saudi Arabia's sweeping anti-graft purge and an escalation of tensions with Iran, though oil prices did ease from their highs.
Dealers said EMini futures for the S&P 500 slipped 0.2 per cent on a report by the Washington Post that Senate Republican leaders were considering a one-year delay in the implementation of a corporate tax cut, a centrepiece of the House plan.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.05 per cent having hit its highest since November 2007 on Tuesday.
Japan's Nikkei fell 0.4 per cent, though that followed a jump to its best close since 1992.
The main event in Asia will be Chinese trade figures for October which will give a read on the state of global trade and on whether Chinese demand for commodities is holding up.
China's exports are seen rising 7.2 per cent on a year ago, with imports up a solid 16 per cent.
Investors will also keep an eye on President Donald Trump as he wraps up his visit to Seoul on Wednesday and then head to China, where he is expected to press a reluctant President Xi Jinping to tighten the screws further on Pyongyang over the reclusive state's belligerent pursuit of nuclear weapons.
In the currency market, trading was described as a "random walk" by analysts at Citi with no clear trends to follow.
The dollar was a slim 0.1 per cent lower at 94.826 against a basket of currencies, having again failed to clear resistance around 95.150.
It was 0.2 per cent lower on the yen at 113.76, but well within the 112.96/114.74 range of the past 12 sessions.
The euro touched a four-month trough at US$1.1552 overnight in the wake of disappointing German industrial data, but quickly steadied in Asia to around US$1.1597.
Wall Street had taken a breather on Tuesday after again making record peaks. The Dow ended up 0.04 per cent, while the S&P 500 lost 0.02 percent and the Nasdaq 0.27 percent.
The S&P 500 financial index led decliners with a 1.33 percent fall, in part on concerns a flattening yield curve would crimp profits at banks that borrow short to lend long.
The US yield curve has flattened sharply in the last couple of weeks, with the gap between two- and 10-year yields shrinking to just 68 basis points, the smallest since 2007.
The move largely reflects wagers the Fed is determined to hike in December, pushing up short-term yields. Such a move was likely to ensure inflation stays lower for longer, thus pulling down longer-dated yields and flattening the curve.
Flatter curves are sometimes harbingers of slower economic growth, but can also signal excessive risk taking as investors lend for longer and longer in search of better returns.
Oil markets were dominated by Saudi Crown Prince Mohammed bin Salman's move to shore up his power base with the arrest of royals, ministers and investors, which an official described as part of "phase one" of a crackdown.
Tensions also escalated between Opec members Saudi Arabia and Iran, which analysts said did more to rattle the oil market than the prince's purge.
After reaching a two-and-a-half year top on Monday, Brent crude futures had pulled back a touch to US$63.69 a barrel. US crude was off 14 cents at US$57.06.