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Afp

Asian rally stalls before Fed meeting, pound rebounds from losses

By AFP
media The pound tumbled after House of Commons Speaker John Bercow blocked Theresa May from submitting her Brexit plan again, citing a centuries-old parliamentary rule UK PARLIAMENT/AFP

Asian markets were mixed Tuesday as investors bide their time until the Federal Reserve's latest policy meeting, while the pound fought back against the dollar after taking a hit from the latest twist in Britain's Brexit saga.

With little fresh information on developments in China-US trade talks, focus has turned this week to the US central bank and its interest rate plans.

Board members are widely expected to hold fire on another hike but its post-meeting statement Wednesday will be pored over, with observers predicting it will opt for just one increase this year, as opposed to the two previously tipped, owing to the stuttering economy.

The Fed's softer tone has been one of the key factors in a global stocks rally this year, with investors buoyed by the prospect of cheap borrowing.

Wall Street provided a positive lead with all three main indexes ending higher, though Asia struggled to take up the baton.

Hong Kong was barely moved after three days of gains, while Shanghai edged up 0.1 percent and Tokyo went into the break down 0.3 percent.

Sydney, Singapore and Seoul were flat, while Wellington and Taipei each dipped 0.2 percent.

On currency markets the pound was slowly edging back up against the dollar after taking a hit from fresh Brexit uncertainty after Prime Minister Theresa May was told she would not be allowed to hold another vote on her exit deal.

- May's new headache -

Speaker of the House of Commons John Bercow used a centuries-old rule that said the government could not submit its Brexit deal for another vote in parliament if it is "the same" or "substantially the same" to the one already rejected by MPs.

The decision means May must come up with a revised plan just two weeks before the key March 29 deadline for leaving, having already been told by EU leaders they will not budge any further.

"Given the EU’s stand seems to be that negotiations have finished on the withdrawal agreement, if that’s right then time’s up, and so the odds of May’s soft Brexit plan being approved now have fallen dramatically," said David de Garis, director of economics and markets at National Australia Bank.

May had been due to hold another vote this week on the pact. If it had passed she would have sought a short extension to Brexit but if it had failed some reports said the divorce could have been put off for up to two more years.

Analysts said the latest news has left many scratching their heads.

"Does it raise or lower the prospect of a no-deal?" asked Neil Wilson, chief market analyst at Markets.com.

"Does it make it more or less likely that an extension to Article 50 will be longer than the short three-months? Tough times trading sterling right now."

- Key figures around 0230 GMT -

Pound/dollar: UP at $1.3270 from $1.3253 at 2040 GMT

Euro/pound: DOWN at 85.52 pence from 85.57 pence

Tokyo - Nikkei 225: DOWN 0.3 percent at 21,528.38 (break)

Hong Kong - Hang Seng: FLAT at 29,410.01

Shanghai - Composite: UP 0.1 percent at 3,100.64

Euro/dollar: DOWN at $1.1340 from $1.1342

Dollar/yen: DOWN at 111.33 yen from 111.41 yen

Oil - West Texas Intermediate: UP one cents at $59.10 per barrel

Oil - Brent Crude: UP five cents at $67.59 per barrel

New York - DOW: UP 0.3 percent at 25,914.10 (close)

London - FTSE 100: UP 1.0 percent at 7,299.19 (close)

 
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