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Asia: Shares rally with oil as Brexit campaign halted; yen sinks

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[WELLINGTON] Asian stocks rallied with the pound and crude oil after campaigning around Britain's European Union membership vote was suspended following the murder of a UK lawmaker. The yen retreated as demand for some haven assets ebbed.

Japan's Topix index rebounded from a four-month low, tracking a rally in the US as the yen weakened for the first time in six sessions. Currencies from Australia's dollar to the euro climbed with sterling after odds on the UK electing to leave the EU in next week's referendum eased.

US crude snapped its longest selloff since February's rout and copper led an advance among industrial metals, while gold also swung back to gains.

Anxiety over the unchartered territory a vote for Brexit could usher in, and the aptitude of central banks to enforce stability amid such an event, has helped erase almost US$2 trillion of global equity value over the past week.

Traders noted that the US equity rebound coincided with a deterioration in odds of Britons electing to leave the EU, while others said the rally was unsurprising given how fast stocks fell at the open.

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Campaigning for the June 23 referendum was suspended after Jo Cox's death, which was the first killing of a UK member of Parliament since the days of Irish Republican terrorism.

"Campaigning has been placed on hold and that to an extent steadied the market," Tony Farnham, a strategist at Patersons Securities Ltd in Sydney, said by phone. "There's a significant number of people still undecided and that's really the swing factor."

Increased concern over the outcome of the British vote came in a week heavy with central bank activity, with Janet Yellen saying the June 23 referendum was a factor in the Federal Reserve's decision to keep interest rates on hold Wednesday.

The Bank of Japan's decision to leave its stimulus unchanged came less than 12 hours after the Fed reined in its projection for rate increases this year. The Bank of England and Swiss National Bank also kept policy as is, citing worries about the potential damage caused by Brexit.

The MSCI Asia Pacific Index rose 0.6 per cent as of 9:30 am Tokyo time, rebounding from its weakest level this month as the Topix climbed 1.4 per cent. The Kospi index in Seoul added 0.8 per cent as Australia's S&P/ASX 200 Index gained 0.4 per cent, led higher by technology and banking shares.

New Zealand's S&P/NZX 50 Index was little changed, with the stock gauge headed for a 1.2 per cent drop this week, its worst weekly retreat since February.

Futures on the S&P 500 Index rose 0.1 per cent to 2,073.25 following the benchmark's 0.3 per cent climb last session. Data Thursday showed initial jobless claims rose more than forecast last week, while the cost of living in the US excluding food and fuel rose in May, propelled by rising rents.

Singapore posts data on exports Friday and Thailand updates foreign-reserve levels, while Hong Kong reviews interest rates.

The yen slipped 0.5 per cent to 104.75 per dollar, weakening from near its strongest level since 2014 to trim its jump in the week to 2.1 per cent. Finance Minister Taro Aso told reporters Friday that he was very concerned about one-sided, abrupt and speculative currency movements.

The yen surged as much as 2.3 per cent last session after the BOJ stood pat on stimulus.

The pound gained 0.5 per cent to US$1.4280 after erasing a slump of more than 1.3 per cent last session as the Brexit odds declined. Odds on the UK leaving the EU slid below 38 after surpassing 44 earlier on Thursday, according to Oddschecker's survey of bookmakers' implied probability.

Ms Cox, a member of the opposition Labour Party, was murdered while meeting constituents in her electoral district in West Yorkshire, northern England. The Guardian newspaper reported an eyewitness saying Ms Cox's attacker had shouted "Britain First." That's the name of a group that campaigns against immigration and Britain's membership in the EU.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, slid 0.1 per cent in a third day of losses as the currencies of Canada, South Africa, Australia and Norway climbed more than 0.3 per cent, rallying with metals and crude.


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