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Pound stable after Brexit drop, Asia stocks mixed before trade talks
HONG KONG, Jan 30, 2019 (BSS/AFP) – The pound ticked up slightly in Asia
on Wednesday after suffering heavy losses on worries about a possible no-deal
Brexit, while regional equities were mixed ahead of crunch trade talks
between China and the United States.
MPs on Tuesday returned to Westminster to vote on a series of proposals
dealing with Britain’s exit from the European Union after roundly rejecting
Prime Minister Theresa May’s controversial deal two weeks ago.
In a closely watched series of votes, they rejected a plan to put back the
date of leaving the EU if no new agreement is agreed by the end of next
month.
They then backed a proposal asking May to replace her deal’s so-called
backstop provision preventing a hard border with Ireland — a proposal
immediately rejected by an EU spokesman.
While observers still expect lawmakers to pass a bill that will avoid a
no-deal Brexit — which economists warn could be economically catastrophic —
the latest developments raised the prospect of it happening.
“The pound fell because (the) vote leaves a no-deal Brexit on the table,
but it has not collapsed into oblivion because at present there is no
alternative to May’s deal and we are not yet at the no-deal do-or-die
moment,” said Neil Wilson, chief market analyst at Markets.com.
“Could she really get it through at the last? It would be a remarkable
coup.”
– Groundless optimism? –
But Minori Uchida, Tokyo head of global markets research at MUFG Bank,
sounded a note of caution.
“Players are still thinking that a hard Brexit will be avoided in the end,
but the optimism is groundless,” he told AFP. “Hard Brexit risks are still
here.”
The pound sank around one percent against the dollar and the euro after
the votes but it managed to edge back slightly on Wednesday.
Equity markets swung as dealers look ahead to the end of the Federal
Reserve’s latest policy meeting later in the day, with hopes for some
guidance on its plans for interest rates this year.
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Wednesday also sees the start of high-level US-China trade talks, with
Beijing’s top economic diplomat due to meet Donald Trump during the two-day
gathering.
However, while markets have been supported by optimism over the talks in
recent weeks, the US decision Monday to charge Chinese telecom titan Huawei
on several counts of fraud and tech theft has muddied the waters.
Still Treasury Secretary Steven Mnuchin insisted the two issues were not
linked and said he saw the chance of a trade deal if China offered the right
concessions.
Hong Kong and Shanghai slipped 0.1 percent in the morning while Tokyo went
into the break 0.5 percent down.
Wellington, Taipei and Manila were all lower but Sydney was flat, while
Singapore and Seoul each edged up 0.1 percent.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.5 percent at 20,555.13 (break)
Hong Kong – Hang Seng: DOWN 0.1 percent at 27,505.71
Shanghai – Composite: DOWN 0.1 percent at 2,593.07
Pound/dollar: UP at $1.3090 from $1.3069 at 2130 GMT
Euro/pound: DOWN at 87.38 pence from 87.48 pence
Euro/dollar: UP at $1.1438 from $1.1435
Dollar/yen: DOWN at 109.24 yen from 109.34
Oil – West Texas Intermediate: DOWN eight cents at $53.23 per barrel
Oil – Brent Crude: DOWN 10 cents at $61.22 per barrel
New York – Dow: UP 0.2 percent at 24,579.96 (close)
London – FTSE 100: UP 1.3 percent at 6,833.93 (close)
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