HONG KONG, Sept 4, 2019 (BSS/AFP) – The pound edged up Wednesday to extend
the previous day’s rebound with Britain looking set for a snap general
election, while investors brushed off Donald Trump’s latest China outburst to
help push Asian equities higher.
After a day of high drama in Westminster, lawmakers voted to take control
of parliamentary business that will allow them to push through a bill
preventing a no-deal Brexit.
The move was a slap in the face for new Prime Minister Boris Johnson, with
several members of his own Conservative party voting against him and defying
a warning of an election in mid-October.
Sterling at one point plunged to $1.1959 on Tuesday — its weakest level
since 1985 except for a 2016 “flash crash” — but rebounded as traders bet
Johnson’s loss would take a no-deal divorce off the table. Most economists
say such a scenario would hammer the British economy.
Still, the development means a continued period of uncertainty for the
country.
Wednesday’s “session of parliament promises more viewing pleasure, with
the possibility that the UK will be heading to the polls… one of the many
possible permutations. This story is one that will just keep on giving as the
week progresses”, said Jeffrey Halley, senior market analyst for Asia-Pacific
at OANDA.
Most Asian equity markets rose after two days of stuttering, with Trump’s
fresh warnings to Beijing over the trade stand-off having little impact.
The president threatened China that if it did not move quicker in
negotiations it would get a worse trade deal from him if he won the next
election in 2020.
“While I am sure they would love to be dealing with a new
administration… 16 months PLUS is a long time to be hemorrhaging jobs and
companies,” Trump said in a tweet.
“And then, think what happens to China when I win. Deal would get MUCH
TOUGHER!”
– ‘Significant air pocket’ –
The outburst comes as reports said the two sides were struggling to agree
parameters for the next round of talks, which Trump had said would go ahead
this month.
Beijing’s point man in the talks, Vice Premier Liu He, met two Republican
senators Steve Daines and David Perdue on Tuesday in the Chinese capital and
said he wanted a negotiated resolution based on “equality and mutual
respect”, state news agency Xinhua reported.
In early trade, Hong Kong rose 1.5 percent, Shanghai, Singapore and Seoul
each gained 0.4 percent and Taipei put on 0.7 percent.
But Sydney fell 0.7 percent after data showed the Australian economy
expanded at its slowest annual pace for 10 years.
The broad gains also came despite a shock drop in US factory activity into
contraction — the first time since Trump came to power and raising concerns
about the state of the world’s top economy.
The figures come days before the release of the closely watched jobs data
on Friday, which is pored over for an idea about the Federal Reserve’s plans
for monetary policy with observers tipping it to cut interest rates again at
some point.
“The US economy just hit a significant air pocket and just like in an
aeroplane experiencing a rapid drop, it’s not a question about stabilisation
but rather how long and how intense the fall will be,” said Stephen Innes,
Asia-Pacific market strategist at AxiTrader.
“With the US manufacturing index unceremoniously plummeting into
contraction, there is some thought this could force the Federal Reserve to
pull multiple rate cut levers this month, which could be viewed as incredibly
supportive for risk assets.”
– Key figures around 0230 GMT –
Pound/dollar: UP at $1.2102 from $1.2087 at 2100 GMT
Euro/pound: DOWN at 90.68 pence from 90.75 pence
Euro/dollar: UP at $1.0976 from $1.0975
Dollar/yen: UP at 106.05 yen from 105.94 yen
Tokyo – Nikkei 225: FLAT at 20,631.14 (break)
Hong Kong – Hang Seng: UP 1.5 percent at 25,903.82
Shanghai – Composite: UP 0.4 percent at 29,42.49
West Texas Intermediate: UP 23 cents at $54.17 per barrel
Brent North Sea crude: UP 22 cents at $58.48 per barrel
New York – Dow: DOWN 1.1 percent at 26,118.02 (close)
London – FTSE 100: DOWN 0.2 percent at 7,268.19 (close)