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Asian markets soften on Trump presidency concerns

Monday 02.10 GMT

Overview

Asian markets were mostly lower despite bank-led gains for Wall Street on Friday but the spotlight was on the British pound as it tumbled to a four-month low amid heightened expectations of a “hard Brexit”.

Hot topic

Sterling was down 1.3 per cent at $1.2027 after falling as low as $1.1986 in early Asian trading, ahead of a speech on Tuesday in which Prime Minister Theresa May is expected to signal that the UK will fully break from the EU’s common market after Brexit.

It was the lowest level and biggest one-day fall for the British currency since October’s “flash crash” and puts the pound on track for its lowest close since May 1985.

Sterling is the worst-performing major currency this year, down 2.5 per cent against the dollar.

Equities

Japan’s Topix and the Nikkei 225 were both down 0.7 per cent, while in Hong Kong the Hang Seng was off 0.8 per cent. China’s Shanghai Composite dropped 0.7 per cent while the technology-focused Shenzhen Composite shed 1 per cent.

Australia’s S&P/ASX 200 was the lone gainer, up 0.5 per cent thanks to a big boost from materials stocks. Duet Group rallied 5.4 per cent after the infrastructure company’s board recommended a A$7.37bn ($5.45bn) takeover offer from an investment group backed by Hong Kong billionaire Li Ka-shing.

On Friday, the S&P 500 added 0.2 per cent, although the boost from a well-received batch of bank earnings was eroded by doubts about the outlook for markets under a Donald Trump presidency.

Forex

The US dollar index was up 0.3 per cent at 101.47 and on track to end a three-day losing streak, its longest run of losses since early December.

That was enough to keep nearly all Asian currencies lower, except the yen. The Japanese currency edged up 0.1 per cent to ¥‎114.34 per dollar, eyeing a sixth straight advance that would mark its longest winning streak since mid-June in the lead-up to the Brexit vote.

Commodities

Gold advanced 0.3 per cent to $1,201.18. The yellow metal has been a beneficiary of the US dollar’s recent weakness, and was on pace for a sixth straight day of gains. That would be its longest run of increases since just before the US election in November.

Oil prices were recovering in Asia after falling 1 per cent on Friday, when Saudi Arabia revealed it had cut production to its lowest level in almost two years. Brent crude, the international benchmark, was up 0.3 per cent at $55.63 a barrel while West Texas Intermediate was up 0.3 per cent at $52.54.

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