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Asian markets retreat from rally, pound stable after Brexit drop
HONG KONG, March 13, 2019 (BSS/AFP) – Asian markets retreated Wednesday
after two days of gains but the pound enjoyed some stability after the
previous day’s sharp losses sparked by Theresa May’s Brexit deal being tossed
out by MPs.
Sterling saw wild fluctuations Tuesday as it hit a near two-year high on
news the prime minister had won a last-minute revision to her agreement with
the EU, then tanked to a three-week low as it was rejected later in the day
at Westminster.
The decision means lawmakers will vote Wednesday on whether to leave the
EU on March 29 without an economic agreement — which is expected to fail —
then Thursday on whether to extend the deadline.
However, there remains a lot of uncertainty, with some observers
suggesting the latest developments put the country a step closer to another
referendum, while others say it could make a no-deal exit more likely.
“My tuppence is that parliament has, in their own mind, seized control of
the Brexit process and will duly ask and likely get an extension to the 29
March exit date,” said OANDA senior market analyst Jeffrey Halley.
“The breathing space granted will be used by whomever to renegotiate a
more palatable Brexit deal for the UK. Except nobody has asked the Europeans
yet. A short-term gain may yet belie long-term pain.”
The news from London added to selling pressure on Asian equity markets,
which had enjoyed a bounce Monday and Tuesday from last week’s battering,
with investors still on edge over the state of the global economy.
Tokyo ended the morning 1.4 percent lower, while Shanghai fell 0.7
percent, Hong Kong lost 0.5 percent and Sydney shed 0.6 percent.
Seoul fell 0.9 percent, Singapore was off 0.7 percent and Wellington
retreated 0.3 percent with Manila and Jakarta also taking a hit.
With very little news coming out of Beijing and Washington regarding the
trade talks, investors are moving to the sidelines until there is something
concrete to buy on.
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“Until the world’s two largest economies conclude an agreement… it will
be difficult to gauge a clearer picture of the global economy in 2019,” added
Halley.
“The outcome of the trade talks –and perhaps the US-eurozone will likely
follow — will dictate whether we will gently roll down the slope or off the
edge of the cliff.”
– Key figures around 0230 GMT –
Pound/dollar: UP at $1.3090 from $1.3062 at 2100 GMT
Euro/pound: DOWN at 86.24 pence from 86.46 pence
Tokyo – Nikkei 225: DOWN 1.4 percent at 21,199.78 (break)
Hong Kong – Hang Seng: DOWN 0.5 percent at 28,784.28
Shanghai – Composite: DOWN 0.7 percent at 3,039.72
Euro/dollar: DOWN at $1.1290 from $1.1292
Dollar/yen: DOWN at 111.25 yen from 111.29 yen
Oil – West Texas Intermediate: UP 27 cents at $57.14 per barrel
Oil – Brent Crude: UP 18 cents at $66.85 per barrel
New York – DOW: DOWN 0.4 percent at 25,554.66 (close)
London – FTSE 100: UP 0.3 percent at 7,151.15 (close)
BSS/AFP/HR/0935