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Sunday June 20th, 2021
International news

Pound struggles after shock British vote; Tokyo tech sell-off, oil up

AFP – The pound struggled on Monday to recover from last week’s sharp losses that came in the wake of a shock British election result that has thrown the country into uncertainty.

The Sterling took a beating on Friday after Prime Minister Theresa May’s ruling Conservative Party lost their Westminster majority days before it holds crunch talks with the EU on exiting the bloc.

May called the election three years early in a bid to strengthen her hand in looming Brexit negotiations, but the gamble backfired spectacularly and now she must rely on the support of Northern Ireland’s Democratic Unionist Party.

"With May’s leadership teetering on the brink, the UK steps ever so closer to the calamitous Brexit cliff edge scenario," Stephen Innes, senior trader at OANDA, said in a note. "Certainly, prolonged uncertainty would argue for a deeper correction on the Sterling as May’s diminished Brexit mandate scenario plays out."

The pound sank to a seven-week low of $1.2636 at one point on Friday before recovering slightly. In early Asian trade on Monday, it was at $1.2744.

On equity markets, technology firms tumbled in line with losses in New York, where the Nasdaq was dragged down by big losses in big-name firms including Apple, Microsoft and Google’s parent Alphabet.

In Tokyo, Sony and Sharp each lost more than one percent, while in Seoul Samsung lost almost two percent. Hong Kong-listed Tencent was 1.4 percent off.

On broader markets, Tokyo ended the morning session 0.4, while Hong Kong was off 0.3 percent and Seoul gave up 0.8 percent. Taipei slipped 0.5 percent, but Shanghai and Singapore were each in the green.

Analysts described the movements as a rotation in which investors were taking profits from highly valued sectors and putting the funds in areas that have underperformed, such as financials, energy and retailers.

Dealers are now waiting for the Federal Reserve’s next policy meeting, which ends on Wednesday. While the Central Bank is widely expected to lift interest rates, its post-meeting statement will be pored over for clues about policymakers’ plans for future increases and their view on the world’s top economy.

The euro edged up slightly as it became clear that the party of new French President Emmanuel Macron was heading for a huge majority after Sunday’s first round of voting for the National Assembly.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.4 percent at 19,941.80 (break)

Hong Kong – Hang Seng: DOWN 0.3 percent at 25,956.61

Shanghai – Composite: UP 0.1 percent at 3,161.32

Pound/dollar: UP at $1.2744 from $1.2738 at 2050 GMT on Friday

Euro/dollar: UP at $1.1206 from $1.1197

Dollar/yen: DOWN at 110.21 yen from 110.26 yen

Oil – West Texas Intermediate: UP 26 cents at $46.09 per barrel

Oil – Brent North Sea: UP 26 cents at $48.41

New York – Dow: UP 0.4 percent at 21,271.97 (close)

London – FTSE 100: UP 1.0 percent at 7,527.33 (close)

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