Asian Markets and Dollar Push Higher, Pound Weak on Brexit

Asian markets extended the previous day’s rally on Wednesday (Mar 29) while the dollar also built on its New York gains that came after a strong US consumer confidence survey reinforced the view of a strong economy.

The greenback was given fresh impetus against the pound and euro as Prime Minister Theresa May prepares to officially fire the gun to start Britain’s exit from the European Union.

After more than a week of negativity, US traders finally saw a broad advance across equities and in the greenback as figures showed American shoppers were growing increasingly upbeat.

News that the consumer confidence index had hit a 16-year high helped soothe worries that President Donald Trump’s economy-boosting agenda could have been thrown off the rails by the collapse of his healthcare bill owing to splits in his Republican party.

Friday’s debacle over repealing Obamacare hammered world markets on speculation the tycoon would not be able to ram through promised tax cuts and infrastructure spending.

But Greg McKenna, chief market strategist at AxiTrader, noted the US reading “goes a long way to support the notion that the US economy is doing well”.

He added: “It’s not just about the hope of change via president Trump’s policies. It’s about actual improvement in data flow and a real sense that the globe is reflating.”

The Dow on Wall Street ended in the black for the first time after an eight-day losing streak, with a bounce in oil prices also providing support. The S&P 500 and Nasdaq also posted healthy gains.

POUND VOLATILITY

The dollar, which has been hammered since the Federal Reserve this month signalled a slower pace of interest rate hikes than expected, also moved higher.

It was at ¥111.20, well up from ¥111.08 in New York and 110.60 yen in Tokyo on Tuesday.

The euro and pound were also well down from a day ago, hit by May’s official signal to leave the European Union, with her letter due to be delivered to Brussels later in the day.

“The pound is likely to remain quite volatile throughout (Wednesday’s) session,” said OANDA senior market analyst Craig Erlam in a note.

On equities markets Hong Kong edged up 0.2 per cent while Tokyo gained 0.1 per cent, Sydney closed 0.9 per cent higher, Seoul added 0.2 per cent and Singapore jumped 0.9 per cent. Wellington rallied one per cent while Jakarta and Bangkok also advanced.

But Shanghai slipped 0.4 per cent.

In early European trade London, Paris and Frankfurt each rose 0.4 per cent.

Energy firms were among the big winners as an outage in Libya wiped 250,000 barrels a day out of the global market, easing worries about a supply glut, while a US stockpiles reading came in on target.

Both main crude contracts rose more than one per cent on Tuesday and extended the gains in Asia.

In Hong Kong, CNOOC put on 0.4 per cent, while Tokyo-listed Inpex was up more than two per cent and Woodside Petroleum in Sydney jumped one per cent.

– Key figures around 0810 GMT –

Tokyo – Nikkei 225: UP 0.1 per cent at 19,217.48 (close)

Hong Kong – Hang Seng: UP 0.2 per cent at 24,392.05 (close)

Shanghai – Composite: DOWN 0.4 per cent at 3,241.31 (close)

London – FTSE 100: UP 0.4 per cent at 7,372.79

Euro/dollar: DOWN at US$1.0785 from US$1.0813

Pound/dollar: DOWN at US$1.2400 from US$1.2457

Dollar/yen: UP at ¥111.20 from ¥111.08

Oil – West Texas Intermediate: UP 25 cents at US$48.62 per barrel

Oil – Brent North Sea: UP 22 cents at US$51.55

New York – Dow: UP 0.7 per cent at 20,701.50 (close)

Courtesy : channelnewsasia