Asia markets mostly up at end of volatile week, pound struggles
AFP – Asian markets mostly rose Friday but fluctuated as investors weighed China-US trade speculation, while the pound struggled to recover from the previous day’s Brexit bruising.
As a volatile week drew to a close, some stability emerged in the oil sector with earlier sharp losses tailing off, providing relief to regional energy firms.
Hopes that the world’s top two economies are making efforts to resolve their painful tariffs standoff provided support to global markets, though conflicting reports were keeping any optimism in check.
On Thursday it was reported that China had handed the US a number of trade concessions as part of a move to smooth relations ahead of a G20 summit where Donald Trump is expected to meet Chinese President Xi Jinping.
The Financial Times also said the two sides were stepping up efforts and that US Trade Representative Robert Lighthizer had told business leaders the next round of tariffs would be put on hold. While Lighthizer’s office denied that, observers said the news still provided some hope.
"Maybe if we can get progress in trade relations, that could be a boost," Jason Browne, chief investment strategist at FundX Investment Group, told Bloomberg News.
However, he added that "the benefits are likely to get offset from expectations of continued (interest rate) hikes from the Fed".
And Stephen Innes, head of Asia-Pacific trade at OANDA, said it appeared the two sides were "looking to kick the can down the road until February to resolve some significant differences".
But he warned "the fear here is that this long and winding road to compromise could be dotted with numerous pratfalls".
– Sterling volatility –
Hong Kong reversed early losses and went into the break 0.3 percent higher while Shanghai also swung 0.7 percent up. Tokyo was off 0.2 percent in the afternoon.
Sydney gained 0.3 percent, Singapore added 0.9 percent, Seoul rose 0.4 percent and Manila surged 1.8 percent. Jakarta and Mumbai were also up.
Eyes were on the pound after it dropped like a stone Thursday in response to the resignation of Dominic Raab, the man in charge of Britain’s Brexit negotiations, who quit saying he did not agree with Prime Minister Theresa May’s draft deal.
His resignation came with those of another key cabinet member and several ministers just hours after May squeezed her hard-fought agreement through the cabinet.
Sterling dropped from a high of $1.3072 Thursday to as low as $1.2724, and has struggled to break back.
And while May has said she will fight on, speculation is swirling that she could be ousted after leading Brexiteer MP Jacob Rees-Mogg formally called for a vote of no confidence.
"Not surprising that in this fast-changing environment, sterling volatility is the highest since the 2016 Brexit referendum," said National Australia Bank economist David de Garis.
Oil prices edged up for a third day, having been hammered by oversupply and weak demand concerns earlier this week.
Despite data showing another jump in US stockpiles the commodity is enjoying some much-needed buying interest after kingpin Saudi Arabia and OPEC are planning to cut output by more than the one million barrels earlier flagged.
Adding to the upward pressure are simmering tensions between Riyadh and Washington over the death of journalist Jamal Khashoggi, with the US imposing sanctions on several senior officials in the Saudi government.
Rob Thummel, managing director at Tortoise, said the imposition of the sanctions "puts some risk back into the market", which had been hit by a continuous build-up in US inventories.
– Key figures around 0420 GMT –
Tokyo – Nikkei 225: DOWN 0.2 percent at 21,765.89
Hong Kong – Hang Seng: UP 0.3 percent at 26,190.33 (break)
Shanghai – Composite: UP 0.7 percent at 2,687.04 (break)
Pound/dollar: UP at $1.2792 from $1.2778 at 2200 GMT
Euro/pound: DOWN at 88.62 pence from 88.64 pence
Dollar/yen: DOWN at 113.44 yen from 113.62 yen
Euro/dollar: UP at $1.1335 from $1.1325
Oil – West Texas Intermediate: UP 39 cents at $56.85
Oil – Brent Crude: UP 49 cents at $67.11 per barrel
New York – Dow: UP 0.8 percent at 25,290.39 (close)
London – FTSE 100: UP 0.1 percent at 7,038.01 (close)