Asia hopes for best in trade talks, Brexit vote
SYDNEY (Reuters) – Asian share markets made guarded gains on Tuesday amid cheery chatter about the chance of a Sino-US trade deal, while investors were sanguine yet another vote on Brexit would still avert a hard exit for the UK.
A holiday in Tokyo kept turnover light and MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added a modest 0.3%. Futures for Japan’s Nikkei NKc1 were trading at 22,760, compared to Monday’s index close at 22,548 .N225. South Korean stocks .KS11 rose 0.9% and Shanghai blue chips .CSI300 were flat.
E-Mini futures for the S&P 500 ESc1 gained 0.15%. China and the United States have achieved some progress in their trade talks, Vice Foreign Minister Le Yucheng said on Tuesday, adding that as long as both sides respected each other, no problem could not be resolved.
US President Donald Trump sounded upbeat on a China deal on Monday, while White House adviser Larry Kudlow said tariffs on Chinese goods scheduled for December could be withdrawn if talks go well.
Trade-sensitive technology stocks .SPLRCT rose 1.1%, pulling the S&P 500 .SPX up 0.69% and near to a record closing high. The Dow .DJI gained 0.21%, while the Nasdaq .IXIC rose 0.91%. [.N] The better mood saw safe-haven bonds extend their recent pullback, with 10-year Treasury yields US10YT=RR at a five-week peak of 1.80%. [US/]
In foreign exchange markets, the dollar found support against the yen at 108.64 JPY= while staying steady on a basket of currencies to 97.289 .DXY. The euro paused after its recent run higher and was last trading quietly at $1.1151 EUR=.
Sterling held firm at $1.2977 GBP=D3 after Prime Minister Boris Johnson failed to get a vote on his Brexit deal and will try again on Tuesday to get the first stage of a withdrawal bill through Parliament.
“If the House of Commons vote in favor of the deal, GBP/USD could rally towards $1.3500 over the medium term. The UK would then enter a transition period that lasts until 31 December 2020,” said Kim Mundy, a currency strategist at CBA.
“If the Commons rejects the deal, GBP/USD will likely stabilize around $1.2800, because the risk of a hard Brexit will remain low,” he added. “Early UK general elections would be the next most logical way forward.”
The Canadian dollar kept its recent gains at C$1.3080 per U.S. dollar CAD= as CBC TV predicted the ruling Liberal government of Justin Trudeau had won re-election. In commodity markets, spot gold was idling at $1,483.98 per ounce XAU=.
Oil prices were little moved as the market fretted about the health of the global economy and the future for energy demand. [O/R]
Brent crude LCOc1 futures were steady at $58.96, while US crude CLc1 added 5 cents to $53.36 a barrel.