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Pound tracks back from Brexit highs, Asia markets mixed
HONG KONG, March 14, 2019 (BSS/AFP) – The pound retreated from nine-month
highs in Asia on Thursday as investors are dogged by Brexit uncertainty,
while equities were mixed as a healthy Wall Street lead was offset by more
disappointing Chinese economic data.
In another night of drama in Westminster, MPs voted against leaving the
European Union without a deal, having rejected Prime Minister Theresa May’s
agreement with the bloc for a second time.
The move sent the pound soaring to highs not seen since June, with most
observers warning that a no-deal divorce would hammer the British economy.
However, the currency retreated from those highs in Asia, with lawmakers
due to vote on whether to extend the March 29 deadline for leaving.
May has warned that if MPs do not adopt her pact there could be a lengthy
delay to Brexit that would see Britain taking part in European Parliament in
elections in May.
“The Brexit soap opera continued with … parliament voting, as expected,
against leaving the European Union without a deal,” said Jeffrey Halley,
senior market analyst at OANDA. “Sterling inevitably rose overnight as
traders piled into the hope-vs-reality trade.”
But he added: “Being irrationally exuberant on the pound could be a
dangerous trade at these lofty levels in the short-term.
“No one has actually asked the Europeans what they want, and they may yet
impose potentially unpalatable conditions as the price of an (exit)
extension.”
– Trump’s trade deal optimism –
On equity markets Shanghai sank 1.2 percent in the morning session after
figures showed factory output grew slower than forecast in the first two
months of the year, while retail sales and investment were broadly in line
with expectations.
The tepid readings highlighted weakness in the world’s number two economy
and reinforced the need for measures by the government to kickstart growth as
the global economy stutters and the US trade war drags on.
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The “data means the economy will take a longer time to bottom out as
industrial production and consumption are still under pressure despite the
rebound in investment”, Liu Peiqian, Asia strategist at Natwest Markets PLC,
told Bloomberg News.
Traders will be keeping a close eye on closing remarks at the annual
National People’s Congress on Friday for an idea about leaders’ plans.
Elsewhere, Sydney and Singapore were also in negative territory, though
Tokyo went into the break 0.7 percent higher and Hong Kong edged up 0.1
percent. Seoul, Taipei and Wellington were also slightly higher.
Wall Street had provided a positive lead after data showed a pick-up in
the US manufacturing sector, while a soft reading on wholesale inflation
reinforced expectations the Federal Reserve will not hike interest rates any
time soon.
With few major catalysts for buying dealers are awaiting fresh
developments in the China-US trade talks with President Donald Trump saying
he saw a “very good chance” of a deal but added he was in “no rush. I want
the deal to be right”.
– Key figures around 0230 GMT –
Pound/dollar: DOWN at $1.3265 from $1.3339 at 2100 GMT
Euro/pound: UP at 85.44 pence from 85.00 pence
Tokyo – Nikkei 225: UP 0.7 percent at 21,431.28 (break)
Hong Kong – Hang Seng: UP 0.1 percent at 28,847.45
Shanghai – Composite: DOWN 1.2 percent at 2,992.17
Euro/dollar: DOWN at $1.1327 from $1.1334
Dollar/yen: DOWN at 111.46 yen from 111.17 yen
Oil – West Texas Intermediate: UP two cents at $58.28 per barrel
Oil – Brent Crude: UP five cents at $67.60 per barrel
New York – DOW: UP 0.6 percent at 25,702.89 (close)
London – FTSE 100: UP 0.1 percent at 7,159.19 (close)
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