Asia stocks inch higher, sterling and euro steady ahead of Brexit talks

Xavier Trudeau
Juin 19, 2017

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent. The Nikkei ended up 0.6% with all other Asia/Pacific bourses in the green too.

Australian shares .AXJO climbed 0.5 percent and South Korea's KOSPI .KS11 jumped 0.6 percent. Chinese indexes got some support from news that home price rises had slowed, although the market remains buoyant.

With the US Federal Reserve's June interest rate decision out of the way risk appetite seems to endure, in Asia at least.

On Friday, Wall Street ended mixed, with energy names offsetting declines in consumer stocks, which were clobbered by Amazon.com's $13.7 billion deal to buy upscale grocer Whole Foods Market.

Europe, however, had a more upbeat session on Friday, with British .FTSE , German .GDAXI and French .FCHI stocks, as well as the broader STOXX Europe 600 .STOXX , all closing higher.

In currencies, sterling was fractionally lower at $1.2772 from late Friday levels in NY, but was more or less steady after London police reported casualties after a van collided with pedestrians near Finsbury Park station early on Monday.

Police reported a number of casualties and said one person had been arrested. The UK's Brexit Secretary David Davis will be meeting the EU's negotiator Michel Barnier.

Davis's agreement to Monday's agenda led some European Union officials to believe that May's government may at last be coming around to Brussels' view of how negotiations should be run. A majority in parliament should give him a powerful mandate to push through pro-business reforms, which is seen as positive for the euro. In the aftermath of the United Kingdom elections which resulted in Prime Minister Theresa May losing her majority government, it would be interesting to see if her hard Brexit stance will prevail or if the United Kingdom will aim for a soft Brexit.

The dollar was little changed on Monday. Data on Friday showed United States home-building declined for a third month in May to the lowest in eight months, while another report showed consumer sentiment in the U.S. unexpectedly dropped in early June.

The dollar index, which tracks the greenback against a basket of six global peers, was unchanged at 97.169, failing to make up any of Friday's 0.3 percent loss. The market's focus today will be on a speech by New York Fed President William Dudley who kicks off a busy week of Fed speeches.

"In the wake of Friday's weak US data, Dudley could provide insight into whether the Fed is still poised to continue normalising monetary policy", said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

The greenback fared better against the Japanese yen JPY=D4 , which remained weak after the Bank of Japan left its ultra-loose monetary policy unchanged last week.

The yen didn't respond to data on Monday showing Japanese exports rose at their fastest pace in May since January 2015.

Gold touched a 3-1/2-week low earlier in the session, and was trading down slightly at $1,252.20 an ounce at 0158 GMT. This helped the dollar bounce slightly to 111.19 yen, to recover some of Friday's losses on the back of disappointing USA data that took the pair down to 110.63 yen.

In commodities, oil futures lingered near six-week lows, as concerns about a supply glut amid faltering demand.

USA crude slipped 0.25 percent to $44.65 a barrel, while global benchmark Brent dropped 0.2 percent to $47.29.

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