Stocks in Asia are higher on Tuesday as strong U.S.
manufacturing data sends the yen slumping against the dollar. The stock surge
was led by Japanese equities.
Also, the British pound dropped 0.6 percent at $1.2770 versus
the dollar in Asian trade, the lowest level it hit in more than three decades.
The sterling started to roil following U.K. Prime Minister
Theresa May’s announcement on Sunday that she would push through with Article
50 by end of March next year. This then gets the clock ticking for the two-year
deadline for Britain to sever its ties with the European Union. Brexit
negotiations are expected to cause “some turbulence” to the economy, according
to U.K. Treasury chief Philip Hammond on Monday.
The Nikkei Stock index edged up 0.8 percent, Korea’s Kospi
went 0.6 percent higher, while Singapore’s FTSE Straits Times Index ended up 0.2
percent. Hongkong’s Hang Seng Index closed up 0.1 percent. Chinese markets are
closed for the week.
“We’re up based on a weaker yen. We’ve had some fairly
positive data on the U.S. side last night,” remarked Alex Furber , senior
client services executive at CMC Markets. This news makes a U.S. rate increase
more probable, he also added.
Gaining traction and moving back into expansionary territory
after a 49.4 plunge in August, the U.S. September purchasing managers index, a
measure of factory activity, climbed to 51.5.
Solid manufacturing numbers sent the yen plunging 0.7
percent against the dollar, with traders exiting the safe-haven yen and turning
back to risk assets. Major exporters gained as yen free-falls, with Honda Motor
up at 1.9 percent, Olympus at 3.9 percent, and Panasonic closed 2 percent
higher.
In other parts of Japan, financial equities made a rebound
after worries about the status of Deutsche Bank prompted selloffs.
The Topix banking subsector added 1.6 percent. Individual
banks like Mitsubishi UFJ Financial Group edged up 1.9 percent and Sumitomo
Mitsui Financial Group was last up 1.6 percent.
Haruhiko Kuroda, governor of Bank of Japan, went in defense
of his below zero interest-rate policy on Tuesday by saying it hadn’t damaged
the bank’s ability to grant loans.
Also, yuan-denominated bond issuances hit record high with
the Chinese currency’s formal inclusion in the International Monetary Fund’s
special drawing-rights basket. Based on data released by Dealogic, there was a
$619 billion volume of yuan-dominated bonds for the first three quarters of the
year, rising 39 percent on year.
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