Asian markets rise on Brexit trade deal progress
MSCI's broadest index of Asia-Pacific shares outside Japan up as Britain and the EU close in on a free-trade deal
Tokyo/New York — Asian shares and the British pound rose on Thursday ahead of the Christmas break, as Britain and the EU closed in on a free-trade deal and investors placed bets on global economic recovery prospects on vaccine developments.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.14%. Australian stocks advanced by 0.57%, while Tokyo shares rose 0.43%.
Chinese stocks rose 0.02%, but Alibaba slumped 6.28%, its biggest daily drop in six weeks, after China's market regulator said it will investigate the tech giant for suspected antitrust behaviour.
US stock futures edged up by 0.11%.
Investors welcomed news that Britain and the EU were near to striking a trade deal on Thursday, which would help avoid shipping and travel chaos on both sides of the English Channel.
Hopes for more fiscal spending and expectations that coronavirus vaccines will become more available next year also supported global equities.
“A pro-risk and weak dollar theme dominated markets on optimism regarding vaccines, US and UK fiscal stimulus, and Brexit, with hope an agreement on the latter can be reached before Christmas,” ANZ Bank analysts wrote in a research memo.
The potential for a Brexit deal boosted sterling, which rose 0.3% to $1.3535. The pound held steady at 90.20p/€.
The pound also drew support after France lifted its ban on freight coming from Britain, which it had enacted in response to a more contagious coronavirus variant in Britain.
MSCI's gauge of global stocks was up 0.1%, but moves were subdued in thin holiday trading.
Alibaba, cofounded by Chinese billionaire Jack Ma, was the stock to watch in Asia on Thursday as Chinese authorities stepped up their campaign against big technology companies.
Separately, Ant Group, the mobile payments and consumer credit arm of Ma's tech empire, said it will comply with all regulatory requirements after China's financial watchdogs said they will conduct regulatory talks with it in the next few days.
In November, China halted Ant's $37bn dual-listing initial public offering, crushing what would have been the world's largest stock market debut.
Wall Street ended mostly higher on Wednesday, with the Dow Jones Industrial Average closing up 0.38% and the S&P 500 edging 0.07% higher. The Nasdaq Composite declined 0.29%.
A raft of mixed US economic data showed lower jobless claims and an uptick in new orders for durable goods, but also a pullback in consumer spending, falling personal income and fading sentiment as the holiday shopping season nears its end amid a resurgent pandemic.
Investors largely shrugged off comments by US President Donald Trump that a nearly $900bn stimulus bill, agreed to after months of wrangling in Congress, was “a disgrace” and needed more work.
“Risk-on sentiment is guiding markets so far today and it appears to be weighted more toward possible optimism toward a Brexit deal and the cherry-picked parts of US releases, rather than Trump's reckless antics over signing the stimulus and funding bill,” said Derek Holt, head of capital markets Economics at Scotiabank.
US West Texas Intermediate crude futures rose 18c to $48.30 a barrel and Brent crude futures climbed 20c to $51.40, buoyed by a drawdown in US stockpiles and a potential Brexit trade deal.
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