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Global Markets: China shares prop-up Asia on stimulus hopes, sterling braces for Brexit plan

Reuters  |  TOKYO 

By Hideyuki Sano

(Reuters) - Asian stocks pulled ahead on Tuesday, led by a bounce in Chinese shares as Beijing signalled more supportive measures to stabilise a slowing economy, while the British pound braced for a showdown in parliament over the government's plan.

Tokyo's Nikkei rose 0.55 percent to 20,474 after a market holiday on Monday while MSCI's broadest index of shares outside recovered from early losses and advanced 0.56 percent. South Korea's Kospi hit one-month highs.

In China, the CSI300 index of and shares rose 0.62 percent, seemingly supported by expectations of more government policy measures to prop-up a slowing economy.

China's said on Tuesday it will aim to achieve "a good start" in the first quarter for the economy in a signal of more growth-boosting steps.

State television also quoted Chinese as saying the government is seeking to establish conditions helpful to meeting this year's economic goals.

That came after data on Monday showed China's exports unexpectedly fell the most in two years in December, while imports also contracted sharply, pointing to further weakness in the world's second-largest economy in 2019 and deteriorating global demand.

Cyclical shares led the gains in the region, with Australian financial shares hitting seven-week highs while Japanese and rose to their highest levels in nearly four weeks.

"It is interesting that cyclicals are leading the gains today. It appears some contrarian investors are starting to buy cyclicals, looking beyond the last economic slowdown," said Nobuhiko Kuramochi, at

S&P500 futures also gained 0.51 percent to 2,594 in early Asian trade.

"But I would suspect there will be heavy selling if we go up further, to around 2,650 in the S&P500 and 21,500 in the Nikkei," Kuramochi added.

In Monday's session on Wall Street, the S&P 500 lost 0.53 percent, with the biggest drag coming from a 0.9 percent fall in

While mounting worries about escalating U.S.-trade tensions and a slowdown in the global economy have pummelled global stock prices since last October, cheap valuations are helping to attract some buyers.

U.S. earnings season began on a positive note on Monday as beat profit estimates. The bank's shares rose 4.0 percent and bolstered the S&P financial sector .SPSY, which rose 0.7 percent.


The British pound is likely to steal the limelight later in the day as the will vote on Theresa May's deal.

On Monday May urged lawmakers to take a "second look" at her deal ahead of a vote that looks set to reject the agreement.

Such a result could open up the possibilities of a wide range of outcomes, from a disorderly exit from the union to a reversal of

"Markets have priced in a rejection of May's plan and there are many scenarios after that. Still I'd think the most likely outcome is to extend the (March. 29) deadline of Brexit," said Masahiro Ichikawa, at

Indeed, currency option markets are barely pricing in the chances of sharp moves in sterling.

The pound's one-month implied volatility stood at 12.5 percent, above the average for the past year of around 8.8 percent well off 20-percent plus levels seen in the days just before the UK referendum on June 23, 2016.

The pound changed hands at $1.2897, up 0.2 percent, having hit a two-month high of $1.2930 on Monday after a report, subsequently denied, that a pro-Brexit faction of lawmakers could support May's deal.

The euro inched up 0.17 percent to $1.1486, consolidating after hitting a 12-week high of $1.1570 touched on Thursday.

The dollar gained 0.24 percent on the yen to 108.16.

also rebounded on supply cuts by club and

International Brent were at $59.71 per barrel, or 1.2 percent from their last close.

U.S. crude futures stood at $51.14 per barrel, up 1.25 percent.

(Editing by Shri Navaratnam)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, January 15 2019. 08:36 IST