Asian stocks digest meaty gains, sterling starved for love

Japan's Nikkei inched up 0.1 per cent after reaching a 14-month top earlier in the week. — AFP pic
Japan's Nikkei inched up 0.1 per cent after reaching a 14-month top earlier in the week. — AFP pic

SYDNEY, Dec 20 ― Asian shares snoozed near 18-month highs today as trade thinned in the run-up to Christmas and investors seemed content to digest the chunky gains already made so far this month.

MSCI's broadest index of Asia-Pacific shares outside Japan was a fraction firmer in early trade, having gained 1.2 per cent for the week so far and almost 5 per cent for the month.

Japan's Nikkei inched up 0.1 per cent after reaching a 14-month top earlier in the week. It was ahead by 2.5 per cent for the month so far. South Korea's market added 0.25 per cent on the day and 5.5 per cent for December.

E-Mini futures for the S&P 500 held at all-time highs having put on 1.2 per cent for the week.

Sentiment had been bolstered after US Treasury Secretary Steven Mnuchin said the United States and China would sign their Phase One trade pact in early January.

Mnuchin said it was completely finished and just undergoing a technical “scrub,” though Beijing has so far dodged all details of the deal.

The US House of Representatives also overwhelmingly approved a new North American deal that leaves US$1.2 trillion (RM4.96 trillion) in annual US-Mexico-Canada trade flows largely intact.

The S&P 500 hit a sixth straight record high, its longest streak since January 2018, and the Nasdaq climbed for the seventh session in a row. The S&P 500, Nasdaq and Dow all notched record closing highs.

The Dow ended yesterday up 0.49 per cent, while the S&P 500 gained 0.45 per cent and the Nasdaq 0.67 per cent.

The market shrugged off US President Donald Trump's impeachment, as the Republican-controlled Senate is widely expected to keep him in office.

Pound in peril

It was mostly quiet in currencies, though sterling was nursing a grudge after suffering a vicious reversal that left it facing its worst weekly fall since late 2017 at 2.4 per cent.

Early Friday, the pound was huddled at US$1.3017 having toppled from a US$1.3514 peak when Prime Minister Boris Johnson used his sweeping election victory to revive the risk of a hard Brexit.

“We see the biggest risks being to GBP/USD depreciation over the next two weeks as Brexit preparations take place amidst the most sluggish UK economy in 10 years,” said Richard Grace, chief currency strategist at CBA.

“GBP can fall because the trade concerns are taking place at a time when the UK trade deficit is the widest it has been in 10 years, and the current account deficit is at a historically large 5.0 per cent of GDP.”

Other currency pairs were little changed on the week with the euro stuck at US$1.1124 having found support around US$1.1100. The dollar idled at ¥109.36, having spent the entire week in a tight 10917/109.67 range.

Against a basket of currencies, the dollar had edged up 0.2 per cent for the week to 97.393 thanks mainly to the steep drop in sterling.

Spot gold was flat at US$1,479.00 per ounce, and up just a fraction for the week so far.

Oil prices consolidated after reaching the highest level in three months, buoyed by falling crude inventories and the easing in US-China trade tensions.

Early today, US crude had eased back 11 cents to US$61.07 a barrel, while Brent crude futures were yet to trade. ― Reuters

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