Asia stocks lower on trade concern, pound jumps


  • Markets
  • Monday, 05 Nov 2018

TOKYO: Asian stocks fell after a reversal in U.S. equities on Friday, amid concern over whether trade tensions with China can be mended. The pound jumped on news of further progress in Brexit negotiations.

Shares declined across the region, with stocks in Japan and Hong Kong underperforming and U.S equity-index futures sliding as optimism on a trade breakthrough at the end of last week tempered after White House economic adviser Larry Kudlow downplayed the potential for a quick deal. 

The dollar steadied, while 10-year U.S. Treasury yields held gains from Friday’s strong jobs report.

The pound strengthened after the Times reported Theresa May has secured concessions from Brussels that’ll allow her to keep all of Britain in a customs union with the EU and avoid a hard border in Northern Ireland.

Politics, geopolitics and central banks will be the focus of the week for investors with the U.S. mid-term elections likely to dominate coverage early on, seen as a referendum on the policies of President Donald Trump. European traders will watch for further signs of progress on Brexit, with May due to discuss the latest proposals with her cabinet Tuesday. 

Investors then turn their eyes to the Federal Reserve, though officials are expected to keep the benchmark interest rate unchanged at their penultimate 2018 meeting Thursday.

“If you are overweight equities you might want to wait, if you are underweight equities it certainly gives you an opportunity to average in and buy a little bit more,” Raymond Lee, managing director and portfolio manager at Kapstream Capital, said on Bloomberg Television. 

“As a bond manager, we are quite defensively positioned only because of some news that could come that is very hard to take a big conviction call -- whether it’s U.S. mid-term elections, how this trade war is going to play out.”

Elsewhere, oil was on track for a sixth day of declines as sanctions on Iran oil snap back into place Monday. - Bloomberg

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