HONG KONG: Asian investors moved warily Tuesday as they look ahead to a crucial week for two of the world’s top economies as Britain outlines its plans for leaving the EU and Donald Trump is sworn in as US president.
Britain’s pound remains stuck at three-decade lows against the dollar after weekend reports Prime Minister Theresa May intends to push for a clean break from the EU, including the single market at customs union.
May is due to set out her stall later Tuesday and analysts said forex traders will be poring over her remarks, with any surprises threatening to send the pound tumbling further.
Sterling was sitting above $1.20 Tuesday, having plunged to $1.1986 Monday, its lowest since October’s “flash crash” that sent it to $1.1841 — a level not seen since the start of 1985.
Friday sees Trump’s inauguration, which many are eyeing with uncertainty.
While world markets soared in the months after his November election win he has come up short when pushed to provide details of his spending and tax plans for the world’s number one economy.
Jeffrey Halley, senior market analyst at OANDA, said in a note: “As we approach the 20th January investors, themselves are at a crossroads. Will his speech see a ‘Trump pump’ or a ‘Trump slump’?
“Do you position yourself continued for irrational exuberance or the coming of the Riders of the Apocalypse? It’s a tough question as Mr Trump’s actual policy announcements have been few, to say the least.”
– ‘Angst and nervousness’ –
On equity markets Tokyo ended the morning 0.6 percent lower with exporters hit by fresh gains in the yen against the dollar. The Japanese unit has risen about four percent in the past week as investors shuffle back to the safe-haven unit after a November-December greenback surge.
Shanghai slipped 0.5 percent, Sydney gave up 0.8 percent and Singapore was 0.2 percent lower while Wellington and Manila also retreated.
However, Hong Kong added 0.1 percent and Seoul was 0.6 percent higher.
“We’ve had a strong rally in equities and we remain cautious,” Niv Dagan, Melbourne-based executive director at Peak Asset Management LLC, told Bloomberg News.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.6 percent at 18,981.57 (break)
Shanghai – Composite: DOWN 0.5 percent at 3,089.36
Hong Kong – Hang Seng: UP 0.1 percent at 22,738.87
Pound/dollar: DOWN at $1.2045 from $1.2055
Euro/dollar: DOWN at $1.0600 from $1.0602
Dollar/yen: UP at 114.23 yen from 114.04 yen
Oil – West Texas Intermediate: UP 15 cents at $52.52 per barrel
Oil – Brent North Sea: DOWN 10 cents at $55.76
London – FTSE 100: DOWN 0.15 percent at 7,327.13 (close)
New York – Dow: Closed for a public holiday
