Overseas markets

Press, 21 November 1987, Page 28

Overseas markets

Wall Street stocks took a beating on Thursday (early yesterday, N.Z. time), as United States financial markets closed without receiving word of a long-awaited agreement in Washington to cut the huge budget deficit. The Dow Jones industrial average dropped 43.77 points to 1895.39 in a sell-off that began when key negotiator. Senator Bob Packwood, an Oregon Republican, predicted no agreement would be reached. Similar fears burdened overseas markets and share prices finished lower in both London and Tokyo. On Friday, United

States time, SUS 23 billion in automatic spending cuts imposed by the Gramm-Rudman law was due to take effect. But the financial markets had been looking for a bigger cut, somewhere in the SUS3O billion range.

Tokyo share prices were mixed in very thin trade because of a reluctance to trade ahead of a three-day week-end and uncertainty over the outcome of United States talks on cutting the Federal budget deficit, brokers said.

“It’s an extremely difficult market to play,” a broker said, noting bewilderment over

whether budget negotiators will reach a conclusion on Friday (United States time). “People are hoping to see a brand-new America,” a Sanyo Securities broker said, adding that the extent of cuts will have a major effect on U.S. stocks.

"Of course if they agree to cut the deficit by less than SUS3O billion there will be heavy selling here,” said a broker at Nomura Securities;

Hong Kong share prices were sharply lower at mid-day on continued concern over the apparent lack of progress in talks to cut the U.S. budget deficit, brokers said.