US-China talks boost Asian shares
High-level trade talks have resumed as US President Donald Trump and Chinese President Xi Jinping had a phone call at the beginning of the month, signalling negotiations in anticipation of their upcoming meeting at the G20 at the end of this month. Chinese, Australian and Korean shares rose while Japanese shares were heading lower. The Nikkei 225 dropped by 0.20%; Hong Kong’s Hang Seng benefitted from Tencent’s Q3 results, closing +1.75% while South Korea’s Kospi index rose 0.97%. US shares dropped for the third time this week, while oil prices modestly recovered following a 12-day downtrend of -17.60% in total. The Aussie remains the strongest currency due to positive job data and a weaker dollar. AUD/USD currently trades at 0.7293 and is approaching the 0.7315 range short-term.
Pound sinks in Brexit chaos
The pound’s plunged 1.5% this morning, as uncertainty over Brexit soared. Yesterday, the UK Cabinet approved a 585-page deal drawn up with the European Union. Today, however, the UK’s Brexit Minister – Dominic Raab – resigned, saying he “cannot in good conscience support the terms proposed for our deal with the EU.” Work and Pensions Minister Esther McVey and Northern Ireland Minister Shailesh Vara also resigned this morning, and rumours abound that other ministers might step down as well.
Euphoria over a presumed deal is turning into worries that the agreement might be binned by the end of the year. Even if the EU Parliament approves the terms, the decisive vote will come to the UK Parliament in December 2018. Clearly, the GBP will remain under pressure. Starting the day at 1.30, it is headed to 1.2800 short-term.
