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Global Markets: Asia shares extend rally, pound bewildered by politics

Reuters  |  SYDNEY 

By Wayne Cole

SYDNEY (Reuters) - Asian shares sought to rally for a third session on Tuesday as hopes for upbeat corporate earnings buoyed Wall Street, while several high-profile resignations from kept sterling on the defensive.

MSCI's broadest index of shares outside <.MIAPJ0000PUS> put on 0.2 percent in early trade, adding to a 1.3 percent rise on Monday.

Japan's Nikkei <.N225> climbed 0.8 percent and <.KS11> 0.6 percent, while E-mini futures for the firmed 0.1 percent.

Sentiment has been soothed by a bounce in Chinese shares which saw blue chips <.CSI300> climb 2.8 percent on Monday for the biggest daily jump since August 2016.

Both the Dow and boasted their biggest gains in more than a month overnight, as shares jumped ahead of earnings reports later this week. The index <.SPXBK> posted its sharpest rise since March 26.

The Dow <.DJI> rose 1.31 percent, while the <.SPX> gained 0.88 percent and the Nasdaq <.IXIC> 0.88 percent.

The story in markets was all about political capers in

Theresa May's foreign minister and negotiator quit on Monday in protest at her plans to keep close trade ties with the after Britain leaves the bloc, stirring rebellion in her party's ranks.

stepped down just hours after minister David Davis's resignation, emboldening some in her to mull a plot to unseat her.

The uncertainty saw sterling sink as deep as $1.3189 at one stage before bouncing somewhat to $1.3254 . Markets still think it likely the of England will hike rates in August, but a full-blown political crisis could change that.

"Heightened political risk at home coupled with uncertainty may prompt the BOE to repeatedly delay monetary policy normalization in 2018," said Lukman Otunuga, a at

"If expectations continue to diminish over the central raising UK interest rates, sterling is at risk of experiencing heavy losses down the road."

The pound's pain was a boon for the U.S. which rallied broadly on expectations the Federal Reserve will keep raising its interest rates.

Against a basket of currencies, the bounced to 94.038 <.DXY> from a low of 93.713. The also edged up to 110.93 yen , from a trough of 110.30, but faces stiff resistance atop 111.00.

The euro was back at $1.1755, having run into profit-taking at a three-week peak of $1.1790 overnight.

In commodity markets, gained on supply disruptions in and and ahead of looming sanctions on [Q/R]

U.S. crude added 6 cents to $73.81, while Brent rose 12 cents to $78.19 a barrel.

Spot gold was a fraction firmer at $1,259.02.

(Reporting by Wayne Cole; Editing by Eric Meijer)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, July 10 2018. 05:52 IST
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