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Most Asian markets enjoyed another
day of gains Wednesday, with support coming from more healthy earnings
results and renewed hopes for a resolution of the China-US trade war.
The pound was barely moved after Tuesday’s brief rally in reaction to
Boris Johnson’s election to replace Theresa May as British prime minister,
with investors keen to see whether the leading Brexiter pushes ahead with a
no-deal divorce from the EU.
While Federal Reserve officials are blocked from speaking on policy ahead
of a crucial meeting next week, their decision on how far to cut interest
rates is the big question on trading floors.
However, investors are still keeping an eye on the corporate reporting
season, which has been broadly positive.
The latest big-name firms to post positive results were Coca-Cola,
toymaker Hasbro and Harley-Davidson, helping all three main indexes on Wall
Street end with sharp gains.
Adding to the upbeat mood were reports that Donald Trump’s Trade
Representative Robert Lighthizer will lead a delegation to China next week to
resume trade talks.
The meeting would be the first head-to-head since negotiations were cut
short in May by Trump’s surprise decision to hit China with more tariffs for
what he called Beijing’s backsliding.
Since then he has met China’s Xi Jinping on the sidelines of the G20 in
Japan, where they agreed to get both sides back around the table.
– Johnson’s ‘do or die’ –
But Vanguard Markets’ Stephen Innes said: “While the trade conversation
remains high on the list of supportive factors for equity market this week,
investors’ risk barometers are completely dialled in on the amplitude of the
US Federal Reserve’s next easing cycle as the looser the policy, the higher
equity markets will soar.”
In early trade, Hong Kong was up one percent and Shanghai more than one
percent, while Tokyo went into the break 0.5 percent higher.
Sydney gained 0.8 percent and Singapore put on 0.3 percent but Taipei and
Seoul each dipped 0.1 percent while Wellington and Manila also fell.
On currency markets, the pound remained stuck around two-year lows against
the dollar after Johnson’s expected leadership win, which means he will be
appointed prime minister later Wednesday.
“Boris Johnson has vowed to deliver Brexit by the October 31 deadline, ‘do
or die’,” said Quentin Fitzsimmons, an asset manager at T. Rowe Price, adding
this would be a tough ask as he comes up against the same problems that
befell Theresa May.
“The UK parliament has rejected the withdrawal agreement that May struck
with the European Union, the EU has stated firmly that it will not
renegotiate that agreement, and the majority of members of parliament remain
opposed to the UK leaving the EU without a deal being agreed upon.”
– Key figures around 0250 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 21,728.87 (break)
Hong Kong – Hang Seng: UP 1.0 percent at 28,740.72
Shanghai – Composite: UP 1.1 percent at 2,931.66
Pound/dollar: DOWN at $1.2430 from $1.2437 at 2050 GMT
Euro/pound: UP at 89.66 pence from 89.62 pence
Euro/dollar: DOWN at $1.1146 from $1.1148
Dollar/yen: DOWN at 108.20 yen from 108.22 yen
West Texas Intermediate: UP 13 cents at $56.90 per barrel
Brent North Sea crude: UP seven cents at $63.90 per barrel
New York – Dow: UP 0.7 percent at 27,349.19 (close)
London – FTSE 100: UP 0.6 percent at 7,556.86 (close)
(B SS/AFP)
