Asian shares mixed amid uncertainties on Brexit, China trade

TOKYO –  Asian shares were mixed Monday amid uncertainties about Britain’s exit from the European Union and the ongoing trade conflict between the U.S. and China

Japan’s benchmark Nikkei 225 gained nearly 0.3% in early trading to 22,548.07. South Korea’s Kospi picked up 0.2% to 2,065.68, while Hong Kong’s Hang Seng added 0.2% to 26,778.99. The S&P/ASX 200 in Australia lost 0.1% to 6,640.40, while the Shanghai Composite slipped 0.1% to 2,934.30.

Shares fell in Taiwan and were mixed in Southeast Asia.

British Prime Minister Boris Johnson is trying to win over rebellious lawmakers in time to meet the Oct. 31 Brexit deadline for the UK’s exit from the 28-nation European Union.

A vote over the weekend ended with an amendment that delays the proposed deal, leaving the situation uncertain. And EU officials have not yet responded to Johnson’s reluctant request for an extension of the month’s end deadline.

“The can is not kicked far down the road with UK Prime Minister Boris Johnson expected to seek a new ‘meaningful vote’ on his deal as soon as Monday with the countdown to the Brexit deadline,” Jingyi Pan of IG said in a commentary.


Meanwhile, Japan reported that its exports fell 5.2% from a year earlier in September while imports slipped 1.5%. The resulting deficit of 123 billion yen ($1.1 billion) reflected weak exports to China, South Korea and other Asian countries, customs data showed.

The mixed performance to start the week is a continuation of the wobbles that ended last week, when the S&P 500 index logged its second straight weekly gain even though stock indexes ended lower on Friday.

Technology companies led the slide, which erased the major U.S. indexes’ gains from the day before. Communication services, industrials and health care stocks also fell, outweighing gains in real estate companies, banks and elsewhere in the market.

Investors are focusing on company earnings reports, searching for a clearer picture on the impact that the trade war between the U.S. and China is having on corporate profits and the broader economy.

The S&P 500 index fell 0.4% to 2,986.20. The index is just 1.3% below its all-time high set in late July.

The Dow Jones Industrial Average dropped 1% to 26,770.20 and the Nasdaq lost 0.8%, to 8,089.54. The Russell 2000 index of smaller stocks gave up 0.4% to 1,535.48.

Uncertainty over the standoff between Beijing and Washington has been roiling markets. Negotiators reached a truce last week that kept the conflict over trade and technology from escalating further, but both sides still have many issues to work out before reaching a substantive deal.

ENERGY: Benchmark crude oil dipped 10 cents to $53.68 a barrel in electronic trading on the New York Mercantile Exchange. It fell 15 cents to $53.78 a barrel Friday. Brent crude oil, the international standard, dropped 20 cents to $59.22 a barrel.

CURRENCIES: The dollar rose to 108.50 Japanese yen from 108.38 yen on Friday. The euro slipped to $1.1158 from $1.1174./gsg

source: business.inquirer.net

British PM Theresa May loses majority, faces pressure to resign

LONDON—British Prime Minister Theresa May faced pressure to resign on Friday after losing her parliamentary majority, plunging the country into uncertainty as Brexit talks loom.

The pound fell sharply amid fears the Conservative leader will be unable to form a government and could even be forced out of office after a troubled campaign overshadowed by two terror attacks.

After being re-elected with an increased majority in the London commuter seat of Maidenhead, May said Britain “needs a period of stability” as it prepares for the complicated process of withdrawing from the European Union.

She said that while the full results had yet to emerge, her party seemed to have won the most seats and “it would be incumbent on us to ensure we have that period of stability”.

But Leftist opposition leader Jeremy Corbyn, whose Labour party surged from 20 points behind, urged May to quit, saying she had “lost votes, lost support and lost confidence”.

Former Conservative minister Anna Soubry, who just held onto her seat, said May was “in a very difficult place” following a “dreadful campaign”.

With a handful of seats still to be declared, the Conservatives were predicted to win 319 seats, down from 331 in 2015 — yet another upset in a turbulent year since the EU referendum in June 2016.

They were mathematically unable to reach the 326 mark that would give them a majority, meaning they will have to form an informal or formal alliance to forward their agenda.

Labour are expected to increase their share from 229 to 260 seats, resulting in a hung parliament.

May, a 60-year-old vicar’s daughter, is now facing questions over her judgement in calling the election three years early and risking her party’s slim but stable majority of 17.

“It is exactly the opposite of why she held the election and she then has to go and negotiate Brexit in that weakened position,” said Professor Tony Travers of the London School of Economics.

Sterling fell nearly two percent against the dollar on the back of the exit poll, as investors questioned who was now going to control the Brexit process.

Early newspaper editions reflected the drama, with headlines such as “Britain on a knife edge”, “Mayhem” and “Hanging by a thread”.

In a night that threatened to redraw the political landscape once again, the UK Independence Party (UKIP), which won 12.5 percent of the vote two years ago and was a driving force behind the Brexit vote, was all but wiped out, hovering around two percent.

The pro-European Liberal Democrats, who have campaigned for a second EU referendum, increased their number of seats from nine, but their former leader Nick Clegg lost his seat.

Meanwhile the Scottish National Party of First Minister Nicola Sturgeon, which has dominated politics north of the border for a decade and called for a new independence vote after Brexit, was tipped to lose around 21 of its 54 seats.

Deputy leader Angus Robertson, one of the strongest SNP performers in the House of Commons, was an early casualty.

‘Pressure to resign’

May, who took over after last year’s Brexit referendum, began the formal two-year process of leaving the EU on March 29, promising to take Britain out of the single market and cut immigration.

Seeking to capitalize on sky-high popularity ratings, she called the election a few weeks later, urging voters to give her a stronger mandate to go into Brexit talks that are expected to begin as early as June 19.

Officials in Brussels were hopeful the election would allow her to make compromises, but this has been thrown into question by the prospect of a hung parliament.

“It creates another layer of uncertainty ahead of the Brexit negotiations,” said Craig Erlam, senior market analyst at OANDA currency traders.

Despite campaigning against Brexit, Labour has accepted the result but promised to avoid a “hard Brexit”, focusing on maintaining economic ties with the bloc.

Barely a month ago, the center-left party seemed doomed to lose the election, plagued by internal divisions over its direction under veteran socialist Corbyn.

But May’s botched announcement of a reform in funding for elderly care, a strong grassroots campaign by Corbyn and the terror attacks, which increased scrutiny of her time as interior minister, changed the game.

“Even if she manages to get just enough seats it will be seen as a failure and she may indeed be under pressure to resign as leader quite quickly,” said Paula Surridge, senior lecturer at the University of Bristol.

Terror in the campaign

Britain has been hit with three terror attacks since March, and campaigning was twice suspended.

A suicide bomber blew himself up outside a pop concert in Manchester on May 22, killing 22 people.

Last Saturday, three assailants wearing fake suicide vests mowed down pedestrians and launched a stabbing rampage around London Bridge, killing eight people before being shot dead by police.

The attacks led to scrutiny over May’s time as interior minister from 2010 to 2016, particularly since it emerged that some of the attackers had been known to police and security services.

Labour seized on steep cuts in police numbers implemented as part of a Conservative austerity program, although May insisted she had protected funding for counter-terrorism.

source: newsinfo.inquirer.net

Eurozone inflation back to positive; Brexit worries weigh

BRUSSELS, Belgium—Eurozone inflation left negative territory in June, statistics showed Thursday, but economic uncertainty from Brexit sparked concerns that damaging deflation could return to Europe.

The rise in consumer prices is welcome news after months of an unprecedented stimulus program by the European Central Bank to jumpstart sluggish growth and low prices in the eurozone.

Consumer prices in June rose a slight 0.1 percent after slipping 0.1 percent in May, the EU’s Eurostat statistics agency said. This was higher than the zero percent forecast by analysts surveyed by data provider Factset.

“Amid the heightened uncertainties triggered by the Brexit vote, some cheery news for the ECB as the eurozone exited deflation in June,” said Howard Archer, chief economist at IHS Global Insight.

Energy prices again drove consumer prices lower, dropping by 6.5 percent, but this was far less than the negative 8.5 percent a month earlier.

Faced with low prices, the European Central Bank has embarked on a series of unprecedented stimulus programs in a desperate battle to kick-start sluggish growth and inflation in the eurozone.

Slow eurozone growth has seen inflation slide in and out of negative territory, threatening a dangerous downward spiral of falling prices and wages. The ECB aims to get inflation back to two percent or just below, a level it deems healthy for growth.

But analysts warned that knock-on effects from the shock decision by voters in Britain to leave the EU could reverse any progress made towards boosting inflation and growth.

At an EU summit on Tuesday, ECB head Mario Draghi warned leaders that the fallout from Brexit could cost the eurozone up to 0.5 percent in GDP growth over the next three years.

“Uncertainty over the effects of Brexit could add to downward pressure on wage growth and increase firms’ reluctance to raise their prices in the coming months,” said Jennifer McKeown, senior European economist at Capital Economics.

The Frankfurt-based central bank this month took the controversial step of buying corporate bonds, its latest weapon in the fight against deflation that also includes negative interest rates for banks.

Critics in powerful Germany however charge that the ECB is overstepping its mandate by lavishing billions on corporate giants and say it could be distorting markets and creating bubbles.

The ECB has already made unprecedented amounts of ultra-cheap loans available to banks on condition they pass it on as credit for businesses and households.

The ECB has also embarked on a major asset purchase program known as quantitative easing, or QE.

source: business.inquirer.net

Brexit, a sign of anti-elite revolt—analysts

PARIS—It was Britain’s poorer and less-educated citizens — angry at not having shared in the economic benefits of a new world order — who pushed it out of the European Union, in a vote that threatens elites, analysts say.

They are those who suffered the worst hangover from the economic crisis, and whose precarious economic position makes them most fearful of rising immigration — to the benefit of far right groups in the EU and Donald Trump in the United States.

“I see the same pattern everywhere I look,” said William Galston, a senior fellow at the US-based Brookings Institution.

“The demographic splits within the UK are exactly the same category for category as the demographic splits within the American electorate in this presidential election.”

Rural areas with high numbers of migrant workers, former industrial hubs and poor areas around cities, those without a university education and older voters were all among the 53.4 percent who voted Brexit.

Galston said this was the same demographic backing controversial Republican candidate Trump in the US, as well as eurosceptic and far-right parties enjoying a rise in support across Europe.

“They mistrust political elites because up until now they haven’t seen any political parties who appear to recognise their discontent and respond to it.”

Galston said while he did not expect these forces to prevail in the United States as they did in the Brexit vote, they were a “major warning signal to established parties throughout Europe”.

‘It’s about what people feel’

Fears are high of a domino effect, with eurosceptic, leftist and far right parties from France to the Netherlands crying victory after the shock Brexit result was announced and calling for similar votes in their own countries.

Political scientist Melanie Sully of the Vienna-based Go-Governance Institute warned Europe was facing a “crisis of democracy” that could be exploited by xenophobic, far right parties.

“If you don’t have any trust in politics, it’s exactly the sort of black hole populists can march into and capture the mood and build on it, to perpetuate their own falsehoods,” she told Agence France-Presse.

At the root of this surge in anti-establishment sentiment is a feeling of fear, loss of control, and traditions and identity lost among those who are struggling economically, analysts say.

“Before we talk about populism, the anti-establishment, we have to talk about the social position of these people. What do they earn? How do they see their everyday lives?” said Tetiana Havlin, a sociologist at the University of Siegen in Germany.

“In everyday life nobody thinks about anti-globalization, anti-establishment. They just see their challenges”, she said.

“This of course gives fertile ground for populism… but in the end this is about what people feel.”

‘The dark side’

Observers point to two main drivers of the surge in scorn for the elite: the hangover from the 2008/2009 economic crisis and the refugee crisis.

“You have a lot of people who took a big hit. These are people who feel economically vulnerable, and when you put demographic fears on top of economic vulnerability this is what you get,” said Halston.

“I don’t think it’s mysterious anymore, we may have been scratching our head a year ago but we should be in no doubt now.”

Many young people who voted Remain are furious at the number of older British voters who backed Leave — lumbering them, as they see it, with the consequences of their decision for decades to come.

Havlin said that many of these voters saw the EU as a source of security and stability when Britain joined in 1973, a time she refers to as “the prosperity years”.

Now older, these voters reeling from austerity and a sense of growing threats at Europe’s borders, feel “threatened and insecure”.

Dominique Moisi, of the French Institute of International Relations (IFRI) said the Brexit earthquake was a dark moment in Europe’s history, comparing it unfavorably to the fall of communism.

“Remember Star Wars: there is the light side and the dark side of the force. The light side was the fall of the Berlin Wall. The dark side is Brexit.”

source: newsinfo.inquirer.net

Global stocks slide on looming Brexit risk

NEW YORK, United States — World stock markets extended losses Monday as fears heightened that Britain could vote to leave the European Union in next week’s referendum.

Tokyo’s main stocks index dived 3.5 percent to a two-month low point by Monday’s close, as worries over Britain’s EU membership vote on June 23 sparked a rally in the safe-haven yen currency, which in turn hammered shares in Japanese exporters.

Craig Erlam, senior market analyst at Oanda trading group, said “risk aversion” continued to drive markets ahead of “a number of key risk events”.

“The UK referendum next week is right at the top of this list given the destabilization effects that a vote to leave the EU could have on global markets,” he said in a note to investors.

US stocks joined the global retreat, falling for a third straight day and pushing the S&P down 0.8 percent. But shares in professional networking company LinkedIn shot up 46.6 percent on news of its $26.2 billion takeover by Microsoft.

Shares of US travel-oriented equities were especially weak, with American Airlines, Delta Air Lines and United Continental all losing at least 3.5 percent in the aftermath of Sunday’s deadly attack by a lone gunman at a gay nightclub in Orlando, Florida.

London’s FTSE 100 index lost 1.2 percent. In the eurozone, Frankfurt’s DAX 30 index and the CAC 40 in Paris were both about 1.8 percent lower. Banking stocks weighed in Milan, where the main index slid 2.9 percent to its lowest level since February.

In foreign exchange, the British pound hit two-month lows against both the euro and dollar.

The pound’s latest tumble against the dollar “could be the tip of the iceberg” if Britons opt to quit the EU, said Alex Holmes, of Capital Economics.

The European single currency meanwhile sank as low as 119 yen, the lowest level since February 2013.

Central banks on tap

Markets also are on edge as the US, Japanese and British central banks meet this week.

Few expect any move on interest rates from the US Federal Reserve and Bank of England, but observers are divided over whether the Bank of Japan will announce more stimulus.

“Chances of the Fed raising interest rates this month are nil at this point, with a July raise looking less and less likely,” Mark Vickery, of Zacks Investment Research, said in a note to clients.

For Oanda’s Erlam, the Brexit risk is also playing a role in the Fed’s timing.

“The Fed will meet this week and while the (May) jobs report may have given them a reason to put off raising interest rates again, the closing of the gap ahead of the UK referendum is likely the real reason behind the delay,” he said.

Hong Kong’s main stocks index tumbled 2.5 percent and Shanghai dived 3.2 percent, while Seoul sank 1.9 percent and Singapore 1.6 percent.

source: business.inquirer.net