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ASIA-MARKETS-UPDATE
Pound drops as Johnson faces battle to pass Brexit bill
HONG KONG, Oct 18, 2019 (BSS/AFP) – Sterling fell Friday as investors fret
over Boris Johnson’s chances of pushing his Brexit deal through parliament,
while Asian markets were mostly down after data showed China’s economy
expanded at its slowest pace in nearly three decades.
The pound rallied almost to $1.30 on Thursday following news that
negotiators had hammered out an agreement that would avoid Britain leaving
the EU without a divorce deal — a move many warn would be economically
catastrophic.
However, joy was soon tempered by the realisation that the British prime
minister faces an uphill task in getting the deal past lawmakers, with
opposition MPs and even some in his own Conservative party saying they were
against it.
Most importantly, Northern Ireland’s Democratic Unionist Party (DUP), which
props up Johnson’s government, said it was “unable to support these
proposals”.
Forex traders sold sterling, pushing it back down below $1.29, and it
extended losses in Asia.
Focus is now on a crucial vote on the deal pencilled in for Saturday.
“Much will depend on the PM’s ability to get some if not all DUP and
(Scottish National Party) MPs onside, in addition to also getting the backing
from the 21 ex-Conservative MPs he expelled from the party last month,” said
National Australia Bank’s Rodrigo Catril.
“Rejection of the deal might well see more political brinkmanship around a
‘no-deal’ Brexit, but the most likely scenario would be yet another extension
of the 31 October Brexit date.”
Jeffrey Halley, senior market analyst at OANDA, said whichever way the vote
goes, “traders should prepare themselves for some severe volatility on Monday
morning, with multiple big-figure moves a strong possibility”.
In early trade London stocks eased 0.4 percent, Paris shed 0.5 percent and
Frankfurt was flat.
– China growth slows further –
Asian equity markets were mostly lower after China said its economy
expanded six percent in the third quarter — marking the slowest pace in 27
years — as leaders struggle to address weak domestic demand and the long-
running US trade war.
MORE/HR/1450
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
The reading was a drop from the previous three months but in line with an
AFP forecast and the government’s 6.0-6.5 percent target for the year.
While the National Bureau of Statistics said the economy “maintained
overall stability”, it added that it “is under mounting downward pressure”
from weakness at home and abroad.
Shanghai ended down 1.3 percent with Stephen Innes at AxiTrader saying
traders were concerned the figures were not weak enough to prompt the Chinese
central bank to embark on a big stimulus drive.
“With the People’s Bank of China, who arguably have plenty of policy
ammunition to right the ship, probably unwilling to turn on the monetary
taps, investors are taking risk off the table,” he said in a note.
Hong Kong was off 0.5 percent amid concern over the possibility of more
violent protests over the weekend, while Sydney closed down 0.5 percent and
Singapore eased 0.4 percent.
Seoul shed 0.8 percent and Wellington lost 0.7 percent, with Taipei and
Manila also lower. But Tokyo closed 0.2 higher at a 10-month high, while
Mumbai and Jakarta also edged up.
Hopes for the China-US trade talks were given a lift after Beijing’s
commerce ministry said negotiators have “accelerated efforts” to hammer out
details of last Friday’s mini-deal and were holding talks on moving on to the
next phase of a wider agreement.
Donald Trump said Wednesday he hopes to sign the deal with President Xi
Jinping at the APEC summit in Chile next month.
“A meaningful de-escalation in US-China trade frictions would help
alleviate some of the market’s most bearish concerns, and at a minimum, it
could ease the… headwinds,” said Innes.
A sense that tensions are easing provided a lift to high-yielding, riskier
currencies such as the South Korean won and Australian dollar.
And the Turkish lira jumped more than one percent after Ankara said it
would pause military operations in northern Syria for five days and US Vice
President Mike Pence said Washington would not impose any fresh sanctions.
– Key figures around 0810 GMT –
Pound/dollar: DOWN at $1.2857 from $1.2891 at 2050 GMT
Euro/pound: UP at 86.48 pence from 86.31 pence
Euro/dollar: UP at $1.1122 from $1.1127
Dollar/yen: UP at 108.63 yen from 108.62 yen
London – FTSE 100: DOWN 0.4 percent at 7,152.55
Tokyo – Nikkei 225: UP 0.2 percent at 22,492.68 (close)
Hong Kong – Hang Seng: DOWN 0.5 percent at 26,719.58 (close)
Shanghai – Composite: DOWN 1.3 percent at 2,938.14 (close)
West Texas Intermediate: UP four cents at $53.97 per barrel
Brent North Sea crude: DOWN 22 cents at $59.69 per barrel
New York – Dow: UP 0.1 percent at 27,025.88 (close)
BSS/AFP/HR/1455