CMC Markets chief market analyst Michael Hewson indicates indicates on a graph showing the sharp dip in the value of the Great British Pound Sterling against the US Dollar at the offices of CMC Markets in the City of London on December 10, 2018 the point in time when Britain's Prime Minister Theresa May announced in the House of Commons the government's intention to delay the 'meaningful' vote on the Brexit withdrawl agreement.
SYDNEY: The pound hovered near 20-month lows on Tuesday, as political turmoil deepened in Britain with a key vote on Brexit being delayed while U.S. shares staged a late rebound in a positive signal for Asian markets.
British Prime Minister Theresa May abruptly postponed a parliamentary vote on her Brexit agreement, a move that hit risk assets globally and sent the pound spiraling to $1.2505.
Separately, disappointing data from major economies including China and Japan have fanned worries about global economic activity. The ongoing Sino-U.S. trade battle has also clouded the outlook for world growth.
All that has put brakes to the rapid momentum in equities, with MSCI's broadest index of Asia-Pacific shares outside Japan skidding more than 16 percent so far this year. It had surged 33.5 percent in 2017.
The index was last off 0.1 percent. Australian shares gained 0.6 percent while Japan's Nikkei lifted 0.2 percent.
Overnight on Wall Street, major indexes bounced modestly from an initial drop due in part to a recovery in Apple shares. The Dow added 0.1 percent, the S&P 500 gained 0.2 percent and the Nasdaq climbed 0.7 percent.
But analysts said overall sentiment was still fragile.
"The bear market vibe at the end of 2018 is expected to continue, with asset prices finding their lows in the first half of 2019 once rate expectations peak and global earnings expectations trough," according to BofAML.
For the year ahead, BofAML has forecast modest gains in equities and credit, a weaker dollar, widening credit spreads, and a flattening to inverted yield curve - a combination that calls for heightened volatility.
Sterling cracked below important chart support around $1.26 as May delayed the vote and the European Union refused to renegotiate while lawmakers doubted her chances of winning big changes.
The dollar climbed on the yen to 113.19. An index that measures the greenback against a basket of major currencies has jumped 5.5 percent so far this year as investors pile on the dollar as a safe haven bet.
The currency also gained as the U.S. Federal Reserve stayed on its policy tightening path, although uncertainties over how much further the Fed can go have turned dollar bets sour.
Among emerging markets, investors will focus on India where the central bank governor abruptly resigned.
In commodities, oil prices echoed the weakness in global stock markets amid worries about a slowdown in demand. - Reuters
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