You are here
Asia: Markets mostly up as dealers await Federal Reserve, sterling flat
[HONG KONG] Most Asian markets enjoyed another day of gains on Wednesday, with support coming from more healthy earnings results and renewed hopes for a resolution of the China-US trade war.
The pound was barely moved after Tuesday's brief rally in reaction to Boris Johnson's election to replace Theresa May as British prime minister, with investors keen to see whether the leading Brexiter pushes ahead with a no-deal divorce from the EU.
While Federal Reserve officials are blocked from speaking on policy ahead of a crucial meeting next week, their decision on how far to cut interest rates is the big question on trading floors.
However, investors are still keeping an eye on the corporate reporting season, which has been broadly positive.
The latest big-name firms to post positive results were Coca-Cola, toymaker Hasbro and Harley-Davidson, helping all three main indexes on Wall Street end with sharp gains.
Adding to the upbeat mood were reports that Donald Trump's Trade Representative Robert Lighthizer will lead a delegation to China next week to resume trade talks.
The meeting would be the first head-to-head since negotiations were cut short in May byMr Trump's surprise decision to hit China with more tariffs for what he called Beijing's backsliding.
Since then he has met China's Xi Jinping on the sidelines of the G-20 in Japan, where they agreed to get both sides back around the table.
JOHNSON'S 'DO OR DIE'
But Vanguard Markets' Stephen Innes said: "While the trade conversation remains high on the list of supportive factors for equity market this week, investors' risk barometers are completely dialled in on the amplitude of the US Federal Reserve's next easing cycle as the looser the policy, the higher equity markets will soar."
In early trade, Hong Kong was up one per cent and Shanghai more than one per cent, while Tokyo went into the break 0.5 per cent higher.
Sydney gained 0.8 per cent and Singapore put on 0.3 perc ent but Taipei and Seoul each dipped 0.1 per cent while Wellington and Manila also fell.
On currency markets, the pound remained stuck around two-year lows against the dollar after Mr Johnson's expected leadership win, which means he will be appointed prime minister later Wednesday.
"Boris Johnson has vowed to deliver Brexit by the October 31 deadline, 'do or die'," said Quentin Fitzsimmons, an asset manager at T Rowe Price, adding this would be a tough ask as he comes up against the same problems that befell Theresa May.
"The UK parliament has rejected the withdrawal agreement that May struck with the European Union, the EU has stated firmly that it will not renegotiate that agreement, and the majority of members of parliament remain opposed to the UK leaving the EU without a deal being agreed upon."