Market Update: Asian Stocks Follow Wall Street Higher; Pound in Focus After Brexit Secretary Quits

Asian stocks rose across the board Monday, taking cues from Wall Street’s positive Friday session following the release of better than expected employment data.

Asian Markets See Green

Major bourses traded higher throughout the Asia Pacific region, with Japan’s Nikkei 225 Index rising 1% by the late morning. Tokyo’s Topix Index also traded 0.8% higher.

In mainland China, the Shanghai Composite Index jumped 1.3% while the CSI 300 Index rose 0.4%%.

Down Under, Australia’s S&P/ASX 200 Index rose 0.3% in Sydney’s midday session.

Wall Street’s Friday rally largely underpinned Asia’s positive start to the week. U.S. stocks finished in positive territory on Friday after the Labor Department reported a net gain of 213,000 nonfarm jobs last month.

The stock rally was largely concentrated in technology, which continues to outperform the broader market by a wide margin. As a result, the Nasdaq Composite Index notched gains of 1.3% Friday to close at 7,688.39. The tech-focused index has returned 11.4% this year, compared with 3.2% for the S&P 500 Index.

Trade War in Focus

Trade tensions between the United States and China came to a head Friday after President Trump’s White House implemented 25% tariffs on $34 billion in Chinese goods. Beijing quickly responded by imposing tariffs of its own on the same value of U.S. goods.

In two weeks, additional tariffs on $16 billion in Chinese goods will take effect, President Trump announced Friday. He also threatened duties on an additional $500 billion in Chinese imports should Beijing choose to retaliate.

At its most recent meeting, the Federal Reserve identified trade as one of the biggest risks facing the U.S. economy. Notably, policymakers said trade uncertainty could spill over into investment spending and business sentiment, which could weigh on the domestic recovery.

Brexit Secretary Quits

The U.K. cabinet member tasked with leading the country out of the European Union (EU) resigned from his post Sunday, delivering a major blow to Theresa May’s government.

Brexit Secretary David Davis along with deputy Steven Baker resigned over a perceived “weak negotiating position.”

“The general direction of policy will leave us in at best a weak negotiating position, and possibly an inescapable one,” Davis wrote in his resignation letter to Prime Minister May, as quoted by Bloomberg.

Davis took exception to the prime minister’s plan to adopt EU regulations covering all goods and agri-food products post-Brexit. As Davis indicated in the letter, this policy “hands control of large swathes of our economy to the EU and is certainly not returning control of our laws in any real sense,” he said.

May’s cabinet last week pushed forward a plan to keep close ties to the EU after leaving the bloc. This so-called “soft Brexit” has disappointed the euroskeptics, who had campaigned on a more independent path for the U.K. following the independence vote.

Currency traders are on high alert for volatile moves involving the British pound, which has proven highly sensitive to Brexit developments. Cable (GBP/USD) was virtually unchanged at the start of Asian trading and currently sits just below 1.3300.

Featured image courtesy of Shutterstock. 

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi