SYDNEY (Reuters) – Asian shares crept higher on Thursday as upbeat bank earnings bolstered Wall Street, while an anti-climactic end to the latest chapter in the Brexit saga gave sterling a moment’s peace.
FILE PHOTO: A woman points to an electronic board showing stock prices as she poses in front of the board after the New Year opening ceremony at the Tokyo Stock Exchange (TSE), held to wish for the success of Japan’s stock market, in Tokyo, Japan, January 4, 2019. REUTERS/Kim Kyung-Hoon
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.1 percent, with Australia was ahead by 0.2 percent.
Nikkei futures JNIc1NKc1 pointed to an opening rise of around 0.5 percent for the cash index .N225. E-Mini futures for the S&P 500 ESc1 firmed 0.6 percent.
On Wall Street, strong earnings from Bank of America (BAC.N) and Goldman Sachs (GS.N) eased worries about the earnings outlook. Bank of America shares jumped 7.2 percent and Goldman 9.5 percent. [.N]
The Dow .DJI ended Wednesday with gains of 0.59 percent, while the S&P 500 .SPX added 0.22 percent and the Nasdaq .IXIC 0.15 percent.
Investors in Asia might be less encouraged by a Wall Street Journal report that U.S. federal prosecutors were investigating Huawei Technologies, the world’s largest telecommunications equipment maker, for allegedly stealing trade secrets from U.S. businesses and could soon issue an indictment.
Such a move could inflame tensions between Beijing and Washington and make a trade deal yet harder.
China’s central bank on Wednesday moved to avert a cash crunch in the economy by injecting a record $83 billion into the country’s financial system.
Also looming in the background were concerns the U.S. government shutdown was starting to take a toll on its economy.
White House economic adviser Kevin Hassett said the shutdown shaved 0.13 percent off quarterly economic growth for each week it goes on.
PLAN B
As expected, British Prime Minister Theresa May narrowly won her confidence vote and invited other party leaders for talks to try to break the impasse on a Brexit divorce deal.
An outline for Plan ‘B’ is due by Monday and the market assumes there will have to be an extension of the Article 50 exit date past March 29.
“Nothing has happened in the last 24 hours to dissuade us from the view that we are headed in the direction of an Article 50 delay, a softer Brexit or no Brexit,” said Ray Attrill, head of FX strategy at NAB.
“But it remains too soon to be buying sterling with your ears pinned back,” he added, noting many uncertainties remained.
All of which left the pound firm at $1.2881 GBP=, though still short of Monday’s peak at $1.2929. It fared well on the euro, which hit a seven-week low before steadying at 88.45 pence EURGBP=.
The lessening of Brexit risk pressured the safe-haven yen and helped the U.S. dollar up to 109.10 JPY=. The euro eased back to $1.1394 EUR= while the dollar index nudged up to 96.077 .DXY.
In commodity markets, palladium XPD= hit record highs thanks to increasing demand and lower supply of the metal used in auto catalysts. Spot gold XAU= held steady at $1,293.68 per ounce.
Brent crude LCOc1 futures rose 66 cents to $61.30 a barrel overnight, while U.S. crude CLc1 was last off 7 cents at $52.24.
Editing by Jacqueline Wong