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Pound lower as UK starts down Brexit road

Wednesday 04:40 GMT


Asian markets were mixed, with energy stocks benefiting from a recovery in crude oil prices, while the UK pound dropped after Prime Minister Theresa May dispatched the letter that will trigger Britain’s exit from the EU.

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The pound weakened 0.3 per cent to $1.2409 in Asia trade, bringing its losses over the past two sessions to 1.2 per cent, in response to the start of the Brexit process on Tuesday night.

The official Article 50 exit process will begin on Wednesday in Brussels with the presentation of Mrs May’s letter to the European Council.

Sterling was the only major currency to make a marked loss against the greenback. The Australian dollar gained 0.2 per cent against its US counterpart to $0.7644, while the Japanese yen was up 0.1 per cent at ¥111.25 per dollar.


Equities followed a positive lead from Wall Street, which on Tuesday recouped some of the sharp losses of the past week thanks in part to a fillip for energy stocks from a rise in oil prices.

Australia’s S&P/ASX 200 index was up 0.9 per cent, with gains led by a 1.7 per cent rise for the information technology segment. Fairfax Media rose as much as 7.5 per cent following a report that private equity group TPG had acquired a stake of up to 4.9 per cent in the media group and was weighing a takeover bid.

In Tokyo, the Topix index was off 0.3 per cent as a 1.3 per cent rally for energy stocks failed to offset broader declines. The real estate sector was down 1.2 per cent while financials slid 1.1 per cent.

Hong Kong’s Hang Seng index was up 0.2 per cent, with Tencent adding as much as 1.8 per cent after the Chinese internet group disclosed it had taken a 5 per cent stake in US electric carmaker Tesla.


Crude oil prices were building on gains made late on Tuesday after executives from some of the world’s largest independent oil traders affirmed their belief that Opec would maintain production cuts as long as Russia increased its compliance.

Brent crude, the international benchmark, was up 0.3 per cent at $51.50 a barrel in Asia, while US marker West Texas Intermediate rose 0.4 per cent to $48.57.

Gold was down 0.2 per cent at $1,248.83 per ounce, reversing some of the gains made earlier in the week during tumult in equities markets.

Fixed income

Sovereign bonds in the region were edging lower as a risk-off mood abated. The yield on 10-year Australian government bonds was up 3 basis points at 2.726 per cent while that on the Japanese equivalent was up 1bp at 0.053 per cent. Yields move inversely to prices.

Ten-year US Treasuries were unchanged in Asia trading, yielding 2.421 per cent.

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