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Pound holds ground after Brexit delay, most Asian markets fall
HONG KONG, April 11, 2019 (BSS/AFP) – The pound held its gains Thursday
after Britain and its EU partners agreed to once again extend the deadline
for Brexit, days before the cut-off for avoiding an economically calamitous
no-deal divorce.
After hours of late-night talks Prime Minister Theresa May was given until
the end of October to pass her deal for leaving the bloc through parliament,
having failed three times already.
The extension allows for an earlier exit if May achieves it, with a review
taking place on June 21.
News of the delay allowed traders to breathe a sigh of relief and the
pound rose slightly soon after the deal but observers noted the reprieve was
only brief with the agreement merely kicking the can down the road. In early
trade London’s FTSE index was down 0.5 percent.
“The problem for traders and investors is that the extension… does not
bring us any closer to a resolution,” said Neil Wilson, chief market analyst
at Markets.com.
“The cliff-edge has simply been pushed back. We are in a period of peak
uncertainty for UK politics and that won’t help investors pile back into UK
assets.”
And there remains much uncertainty, with the prime minister under intense
pressure from hardline Brexit supporters in her Conservative party not to
compromise in her talks with the opposition Labour party, while the
discussions are moving slowly.
– Pressure on May –
Michael Hewson, chief market analyst at CMC Markets UK, said: “May will
now have to return to the UK and make the case to her disgruntled Brexiter
MPs later today that the UK will… be in the EU for another six months.
“This is not likely to go down well, which could well increase internal
party manoeuvres to replace her.”
Asian equity markets mostly fell, with few catalysts to drive buying and
investors still on edge over a brewing trade battle between the United States
and Europe.
White House threats this week to hammer $11 billion worth of EU goods with
tariffs jolted markets, which have been rallying this year on optimism that
China and the US were close to ending their own battle.
MORE/HR/1445
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
The warning revived concerns about Donald Trump’s protectionist agenda
that has taken aim at US trading partners.
Hong Kong shed 0.9 percent and Shanghai tumbled 1.6 percent despite a jump
in Chinese inflation that indicated stabilisation in the world’s number two
economy. Sydney lost 0.4 percent and Taipei retreated 0.6 percent. There were
also losses in Jakarta, Mumbai, Manila and Bangkok.
But Tokyo reversed an early loss to end 0.1 percent up, with Wellington
also up. Seoul and Singapore were barely moved.
Paris and Frankfurt were slightly lower in the morning.
Regional investors were also unmoved by the latest central bank
dovishness.
The Federal Reserve released minutes of its March meeting that reinforced
expectations that it will not lift interest rates this year as it keeps an
eye on the US economy and brewing risks abroad.
“I think this confirms the message that we got from the March meeting,”
James McCann, senior economist at Aberdeen Standard Investments, told
Bloomberg News.
“This is a Fed that’s pretty happy to just sit on its hands for the time
being and stay on hold and see how some of these cross currents play out.”
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 21,711.38 (close)
Hong Kong – Hang Seng: DOWN 0.9 percent at 29,839.45 (close)
Shanghai – Composite: DOWN 1.6 percent at 3,189.96 (close)
London – FTSE 100: DOWN 0.5 percent at 7,386.06
Pound/dollar: DOWN at $1.3088 from $1.3091 at 2040 GMT
Euro/pound: UP at 86.22 pence from 86.09 pence
Euro/dollar: UP at $1.1284 from $1.1272
Dollar/yen: UP at 111.16 yen from 111.00 yen
Oil – West Texas Intermediate: DOWN 40 cents at $64.21 per barrel
Oil – Brent Crude: DOWN 36 cents at $71.37 per barrel
New York – Dow: FLAT at 26,157.16 (close)
BSS/AFP/HR/1450