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Asia stocks gain as Brexit fears ebb slightly, pound surges

Syndicated News
Written by Syndicated News

TOKYO, June 20 2016 : Asian stocks gained early today as rising expectations of Britain voting to remain in the European Union lifted risk sentiment and the pound jumped against its peers.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.4 percent.

Japan’s Nikkei .N225 climbed 1.5 percent, helped by a retreat in the recently bullish yen. Australian stocks added 0.3 percent and South Korea’s Kospi .KS11 rose 1 percent.

Three British opinion polls ahead of the EU membership referendum on June 23 showed the ‘Remain’ camp recovering some momentum, although the overall picture remained one of an evenly split electorate.

Global markets, buffeted this month by Brexit woes, had a breather at end of last week from a three-day suspension in British campaigning following the fatal attack on lawmaker Jo Cox, a strong supporter of Britain staying in the EU.

“It is hard to think the market’s calmer tone to end last week is going to be an ongoing theme this week, particularly as Brexit campaigning and the release of opinion polls has resumed again,” wrote strategists at ANZ.

“To be fair, the sad murder of UK politician Jo Cox may see the rhetoric from both camps get toned down somewhat. But markets will still, no doubt, swing about with movements in opinion polls, just as they did last week.”

The pound meanwhile climbed 1.4 percent to $1.4573 GBP=D4, extending a recovery from last week’s two-month trough of $1.4013. It jumped 1.9 percent to 152.50 yen GBPJPY=R, pulling well away from a three-year trough of 145.34 set on Thursday.

The safe-haven yen, which had soared to a 22-month high of 103.555 per dollar last week on Brexit woes, pulled back.

The dollar was up 0.5 percent at 104.650 yen JPY=. The euro rose 0.5 percent to $1.1336EUR=.

The Australian dollar, seen as a rough measure of risk sentiment, was up 0.4 percent at $0.7422 AUD=D4 to put further distance between a two-week trough of $0.7286 touched late last week.

The dollar index .DXY touched an 11-day low of 93.696 early today as the greenback gave back ground against most of its major peers, apart from the yen.

Dovish comments from St. Louis Fed President James Bullard on Friday also weighed on the U.S. currency.

In commodities, crude oil prices extended gains as easing Brexit worries and a weaker dollar helped the commodity after six straight days of declines. [O/R]

U.S. crude CLc1 gained 0.6 percent to $48.27 a barrel and Brent crude LOc1 was up 0.55 percent at $49.44 per barrel. – Reuters

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