Morning Report

  • Stocks in Asia were mixed on Monday morning as investors remained cautious following fresh developments in British politics and the ongoing tensions between the United States and China.
  • British Prime Minister Theresa May said on Sunday that the number of letters required to trigger a no-confidence vote in the Parliament had not been met and a change in leadership will only delay Brexit.
  • Meanwhile, competition between the U.S. and China over the Pacific was thrown into the spotlight at the Asia-Pacific Economic Cooperation summit in Papua New Guinea over the weekend.

Equity market across the globe

Stocks in Asia were traded mixed Monday morning as investors remained cautious following fresh developments in British politics and the ongoing tensions between the United States and China.

Japan’s Nikkei 225 rose 0.52 percent in early trade while the Topix index saw gains of 0.39 percent.

The positive moves followed trade data that showed the country’s exports rising 8.2 percent in October from a year earlier, reversing the decline seen in September. Still, the October number came below expectations of a 9 percent rise from economists polled by Reuters.

Meanwhile, South Korea’s Kospi rose 0.32 percent.

Australia’s benchmark ASX 200 slipped 0.31 percent in morning trade, with most sectors seeing losses. Energy stocks fell 1.43 percent while the heavily weighted financial subindex was down 0.38 percent.

The Chinese markets, which have been closely watched due to the ongoing trade fight between Washington and Beijing, are set to open at 9:30 a.m. HK/SIN.

*May defends her Prime Ministership*

British Prime Minister Theresa May said on Sunday that the number of letters required to trigger a no-confidence vote in the Parliament had not been met and a change in leadership will only delay Brexit.

If enough members of parliament from May’s own party back a no-confidence vote, there will be a leadership contest and the prime minister would need more than 50 percent of the vote to stay in office.

May also said that a second referendum is not in the cards.

In the previous week, a flurry of ministers resigned from their positions, including Brexit Secretary Dominic Raab, in protest at May’s draft Brexit agreement. Their resignations came after May said she had obtained enough support from her senior ministers for the proposal to move forward.

The British pound traded at $1.2828 Monday morning during Asian hours, after falling from levels above $1.30 in the previous week.

*US and China spar over vision for Pacific*

Competition between the U.S. and China over the Pacific was thrown into the spotlight at the Asia-Pacific Economic Cooperation summit in Papua New Guinea.

U.S. Vice President Mike Pence listed U.S. differences with China, a day after he directly criticized its Belt and Road program, saying countries should not accept debt that compromised their sovereignty.

China’s foreign ministry responded by saying no developing country would fall into a debt trap simply because of its cooperation with Beijing.

*Currencies*

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.450 after last Friday’s fall from the 97 handle.

The Japanese yen, widely viewed as a safe-haven currency, was at 112.79 against the dollar after seeing lows above 114.1 last week. The Australian dollartraded at $0.7316 after rising from the $0.725 handle last Friday.

The People’s Bank of China (PBOC) set the yuan reference rate at 6.9245 vs Friday’s fix of 6.9377.

Oil

Oil prices rose on Monday as traders expected top exporter Saudi Arabia to push producer club OPEC to cut supply towards the end of the year.

Despite that, market sentiment remains weak on signs of a demand slowdown amid deep trade disputes between the world’s two biggest economies, the United States and China.

Front-month Brent crude oil futures, the international benchmark for oil prices, were trading at $67.29 per barrel at 0045 GMT, up 53 cents, or 0.8 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures, were up 61 cents, or 1.1 percent, at $57.07 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC), de-facto led by Saudi Arabia, is pushing for the producer cartel and its allies to cut 1 million to 1.4 million barrels per day (bpd) of supply to adjust for a slowdown in demand growth and prevent oversupply.

Despite Monday’s gains, crude prices remain almost a quarter below their recent peaks in early October, weighed down by surging supply and a slowdown in demand growth.

On the demand-side, Japan’s October crude oil imports – which are the world’s fourth biggest, but which are in structural decline because of a falling population and improving energy efficiency – fell by 7.7 percent from the same month last year, to 2.77 million barrels per day (bpd), the Ministry of Finance said on Monday.

This comes as supply in the United States is surging.

U.S. energy firms added two oil rigs in the week to Nov. 16, bringing the total count to 888, the highest level since March 2015, a weekly report by energy services firm Baker Hughes said on Friday.

The rising drilling activity points to a further increase in U.S. crude oil production, which has already jumped by almost a quarter this year, to a record 11.7 million bpd.

Published by prashanti forex

Prashanti Forex is managed by a certified treasury professional with an experience of more than 15 years in Finance and Advisory Business. His expertise come from various organisations, where he has gained knowledge and deep understanding of financial environment. His Principle Objective is providing customised advise with excellent service, committing a relationship based on integrity, understanding, honesty and trust. We are glad to offer you a boutique of services which will enable your organisation to enhance the profitability and efficiently manage the business risks. Our Services are : Treasury & Risk Management Solutions Trade Finance Wealth Management

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