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Markets Update am

Stocks Start the Week on positive, Asia shares gain, Pound down on Brexit saga

Asian share markets rose on Monday, extending last week’s gains, as investors awaited a rush of February industry surveys to take the pulse of the global economy, while sterling stumbled on concerns the UK might yet vote to leave the European Union.

Despite the fresh “Brexit” uncertainty, financial spreadbetters expected European stock markets to open higher also, with Britain’s FTSE .FTSE seen up 0.50 percent, Germany’s DAX .GDAXI 0.37 percent, and France’s CAC 40 .FCHI 0.54 percent

But much of the day’s action was in the currency markets, where sterling tumbled on worries that Britain may quit the European Union flared up after London Mayor Boris Johnson threw his weight behind the exit campaign.

It slid as far as $1.4235 GBP from around $1.4405 late on Friday, before stabilizing around $1.4275, down 0.9 percent on the day.

Against the yen, it slumped to as low as 160.40 yen GBPJPY , its lowest since November 2013, from 162.10 late on Friday before partially rebounding.

Other major currencies were steadier. The dollar was a touch firmer at 112.90 yen JPY=, as was the euro at 125.45 EURJPY= underpinned by recent data. Against the greenback, the common currency was also slightly weaker at $1.11120 EUR=.

The dollar was underpinned by data last Friday that showed underlying U.S. consumer price inflation accelerated in January by the most in nearly 4-1/2 years, supporting the view the Fed could gradually raise interest rates this year as forecast.

“Political uncertainty generated by the UK referendum will weigh on GBP,” said Elias Haddad, currency strategist at Commonwealth Bank.

London’s stock market is shrugging off the development, however, jumping 0.8 per cent as it tracks peers in a chipper start to the week.

After an upbeat Asia-Pacific session, the pan-European Stoxx 600 is opening up 1 per cent as mining stocks lead the way.

US index futures suggest the S&P 500 will add 19 points to 1,937, taking its gains since hitting a 2-year intraday low on February 11, to 7 per cent.

Wall Street’s latest rebound comes as investors show less stress about a number of issues.

Fears have waned about a slowing Chinese economy and its impact on global growth; the dangers to the banking system of central banks negative interest rate policies as they try to boost their economies; and the prospect of more selling of financial assets by oil producing sovereign wealth funds after the oil price collapsed to multiyear lows.
The price of Brent crude is gaining 2 per cent to $33.66 a barrel, up 23 per cent since hitting a 12-year low just four weeks ago and West Texas Intermediate, the US-based contract, is climbing 3.1 per cent to $30.57.
The energy sector has taken some comfort from recent developments in the oil market, where major producers proposed freezing oil output at January’s level in an effort to ease a supply glut and shore up prices

The Shanghai Composite rose 2.4 per cent as investors appeared relaxed about changes at the top of the China Securities Regulatory Commission, hoping for a steadier hand at the markets’ top watchdog.

Hong Kong’s Hang Seng added 0.9 per cent and Japan’s Nikkei 225 rose 0.9 per cent as traders in the region brushed off private sector surveys painting a soft picture of business conditions in the worlds second and third biggest economies.

 

As for today, European data will be the major focus today.

Eurozone PMI manufacturing and services are both expected to drop slightly in February. In particular, there is expectation that France PMI manufacturing would dip below 50 again. Swiss will release PPI. UK will release CBI trends total orders. Looking ahead, a couple of important data will be released including German Ifo, US home sales, durable goods, GDP revision Japan CPI, and UK GDP revision. Here are some highlights for the week:

  • Tuesday: German Ifo; US S&P Case Shiller house price, existing home sales, consumer confidence
  • Wednesday: Australia wage price index; Swiss UBS consumption indicator; UK BBA mortgage approvals; US new home sales
  • Thursday: German Gfk consumer sentiment, Eurozone M3, CPI final; UK GDP revision; US durable goods orders, house price index
  • Friday: New Zealand trade balance; Japan CPI; German CPI; US GDP revision, personal income and spending

 

HSBC Predicts Bumpy Road ahead as China Growth slows

Pre-tax profit at Europe’s biggest bank rose just 1% to $18.9bn (£13.1bn) for the year to December after a 1% in revenue to $57.7bn.

Chairman Douglas Flint said: “China’s slower economic growth will undoubtedly contribute to a bumpier financial environment.”

Asia accounted for 83.5% of HSBC’s global pre-tax profit last year.

However, Mr Flint said that he expects China “to be the largest contributor to global growth as its economy transitions to higher added value manufacturing and services and becomes more consumer driven”.

The lender’s group chief executive, Stuart Gulliver, noted the bank had seen a tough year in 2015, but that it was continuing to focus on delivering cost cutting measures announced in June last year.

A sculpture of a lion, seen through hedges, sits outside the main entrance to the HSBC Holdings Plc headquarters in the Canary Wharf business, financial and shopping district in London, U.K., on Saturday, Feb. 13, 2016. HSBC's board will meet on Sunday to decide whether to shift its headquarters from London, according to two people with knowledge of the decision. Photographer: Luke MacGregor/Bloomberg©Bloomberg

HSBC said it was being investigated by US authorities over its hiring of people linked to Asian governments, adding to the bank’s growing litigation worries, which helped to drag it to a fourth-quarter loss.

HSBC to axe up to 25,000 jobs globally in savings drive.

London-listed shares in HSBC have fallen 16% in the year-to-date and more than 25% over the last 12 months.

Last year, the bank announced thousands of job cuts, along with asset sales, as part of a major cost-cutting plan.

The lender has a global network of more than 6,000 offices in 72 countries and territories and serves some 48 million customers, according to its website.


 

 

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