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Calm after storm

  • Written by AFP
  • Published in World
  • Read: 8

HONG KONG -- Stock markets rallied again Thursday morning, tracking another surge in Europe and New York and extending a rebound from last week’s hammering fuelled by Britain’s shock vote to leave the EU.

The pound also held on to most of its gains versus the dollar as other higher-yielding, riskier, currencies also benefited from hope that the fallout from Friday’s referendum will not be as bad as feared.

Speculation that authorities will announce monetary easing measures to offset any negative impact have also provided strong support.

“Optimism is rising that this event won’t be the catalyst for global market volatility,” said Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand.

“Let’s hope the market is right, but there’s a lot of water yet to flow under the bridge.”
   
Tokyo rose 0.8 percent by the break, Hong Kong added 1.1 percent, and Seoul 0.4 percent. Singapore and Taipei each put on more than one percent. Shanghai was flat.
   
Sydney climbed 1.4 percent ahead of a neck-and-neck general election in Australia at the weekend.
   
Asian traders followed strong leads from their counterparts in the US and Europe, where London’s FTSE 100 index wiped out all its post-Brexit losses.
   
“The initial shock over the UK voting out of the EU is easing across the world,” Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co., told Bloomberg News.
   
“We’ve survived the event-related risk, and investors are beginning to see that the impact on the actual economy is limited. There’s hope for policy measures globally, not just in Japan, so that’s supporting markets.”
   
Trading floors are rife with talk of fresh stimulus measures from key central banks.
   
After a $17 billion boost by South Korea, Japan is in focus after the country’s prime minister, finance minister and central bank boss held talks Wednesday.
   
On currency markets the pound edged down slightly from its New York close but managed to hold above $1.34, well up from the 31-year-low $1.3121 touched Monday.
   
There were also gains for emerging market and other risk currencies against the US dollar, with South Korea’s won up 0.5 percent and the Malaysian ringgit 0.4 percent higher. The Canadian and Australian dollars also rose.
   
However, there remains plenty of caution as Britain and its EU partners struggle to reach a divorce agreement.
   
With Prime Minister David Cameron handing over responsibility in the autumn to an as-yet-unknown successor, European leaders are adamant that London will not win any concessions to gain access to the vast single market.

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