Asian stocks up on eased UK uncertainties, stimulus hopes
SEOUL, South Korea—Asian stock markets traded higher on Wednesday following the Dow’s record-high close overnight, as the confirmation of Britain’s new leader eased uncertainties while the stimulus hopes also helped lift stocks in the region.
KEEPING SCORE: Tokyo’s Nikkei 225 rose 0.8 percent to 16,231.43 and South Korea’s Kospi gained 0.7 percent to 2,005.55. Hong Kong’s Hang Seng index rose 0.5 percent to 21,328.90. Australia’s S&P/ASX 200 advanced 0.7 percent to 5,388.50. Stocks in mainland China, Singapore and the Philippines were also higher but Indonesian stocks were slightly lower.
ANALYST’S TAKE: “Market sentiment has improved as Britain’s new prime minister has been confirmed and thus substantially reduced the political uncertainties following the Brexit vote,” said Margaret Yang, a market analyst at CMC Markets Singapore, referring to Britain’s vote last month to leave the European Union. “Although there is still a lack of clues as to when negotiations will start and the new terms of the UK’s relationship with the EU still remain uncertain, at least now we know there is a plan and the roadmap is clearer.
UK WATCH: Britain’s Conservative Party has confirmed that Theresa May has been elected party leader with immediate effect and will become the next prime minister. Prime Minister David Cameron has said he will step down Wednesday and May will immediately replace him. The confirmation of the new leader sent the British pound higher.
CENTRAL BANK WATCH: Analysts said market expectations for British central bank’s first rate cut also rose sharply after new British leader was confirmed. Most economists anticipate the Bank of England to look to stimulate the British economy at the policy meeting on Thursday with some expecting the central bank to reduce its benchmark interest rate to a new record low from the current 0.5 percent, where it has been since March 2009. In Japan, stocks extended gains after Prime Minister Shinzo Abe’s Liberal Democratic Party emerged victorious from parliamentary elections driven by the hopes that Abe would continue to flood the markets with money by expanding bond purchases.
WALL STREET: The US markets closed higher on Tuesday with Dow Jones industrial average finishing at a record high. The Dow rose 120.74 points, or 0.7 percent, to 18,347.67. The S&P 500 gained 14.98 points, or 0.7 percent, to 2,152.14. The Nasdaq composite rose 34.18 points, or 0.7 percent, to 5,022.82.
OIL: Benchmark US crude fell 68 cents to $46.12 per barrel in New York. The contract added $2.04 to close at $46.80 a barrel on Tuesday. Brent crude, a standard for international oil prices, lost 83 cents to $47.64 a barrel in London.
CURRENCIES: The dollar fell to 104.42 yen from 104.84 yen. The euro weakened to $1.1053 from $1.1063.
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