Sterling scarred by Brexit turmoil; Asia shares hold trade hopes
The British pound lay battered in Asia on Friday after a bout of political turmoil fanned fears the country could crash out of the European Union without a divorce deal.
Asian share markets looked set to fare better as hopes for a thaw in Sino-U.S. trade relations gave Wall Street a fillip, though there were duelling reports on the prospects for an actual agreement.
MSCI`s broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was ahead 0.15 percent in very early trade, while Nikkei futures
Still, sterling stole the limelight after a rash of resignations rocked Prime Minister Theresa May`s government and threw into doubt her long-awaited Brexit agreement just hours after it was unveiled.
Fears that May`s hard-fought deal could collapse sent British markets into gyrations not seen since the June 2016 referendum on EU membership. [nL8N1XQ1W6]
The pound suffered its worst one-day loss against the euro since October 2016 and was last at 88.68 pence
Joseph Capurso, a senior currency strategist at CBA, listed just some of sterling`s woes.
"If and when a vote on the withdrawal agreement occurs is uncertain. Whether the withdrawal bill is passed by both houses of Parliament is uncertain."
"Whether the Prime Minister resigns or is challenged for the leadership is uncertain. And, whether there is a second referendum and/or an election is uncertain."
All of which helped British bonds rally sharply as investors wagered the political chaos and risk of a hard Brexit would deter the Bank of England from tightening anytime soon.
Yields on 5-year paper
Absent the British drama, investors chose to be optimistic on the chance of progress on tariffs between the United States and China.
A Financial Times report said U.S. Trade Representative Robert Lighthizer has told some industry executives that another round of U.S. tariffs on Chinese imports has been put on hold.
CNBC later reported that Lighthizer`s office had denied the story, but markets were cheered anyway. [nW1N1WQ02E] [nS0N1WS01B]
The benchmark S&P 500 index <.spx> gained 1.06 percent to snap five days of losses, while the Dow <.dji> rose 0.83 percent and the Nasdaq <.ixic> 1.72 percent. [.N]
The plunge in sterling lifted the dollar against a basket of currencies to 97.066 <.dxy>, even as the euro firmed a touch to $1.1328
In commodity markets, gold was flat at $1,212.97
Oil prices regained some composure after their recent drubbing, helped by a decline in U.S. fuel stockpiles and the possibility of a cut in OPEC output. [O/R]
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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