Pound jumps on Conservative win; trade talk lifts shares
BANGKOK – The British pound edged higher Friday as Prime Minister Boris Johnson's Conservative Party claimed a robust majority in Parliament, while talk of China-U.S. trade deal buoyed share prices in Asia.
The British pound rose to $1.3470 from $1.3385 late Thursday but then fell back to a much less enthusiastic $1.3403 as results showed the Conservatives winning at least 363 seats in Parliament with 648 out of 650 results declared.
The benchmark FTSE 100 jumped 1.5% to 7,381.34, while in Paris the CAC 40 rose 1.1% to 5,947.82. Germany's DAX advanced 1.3% to 13,397.52. U.S. shares also looked set for gains, with the future contracts for the S&P 500 and the Dow Jones Industrial Average both up 0.4%.
The resounding victory for Johnson should clear the way for him to carry out his plan to take the U.K. out of the 28-nation European Union by the end of January.
That's a mixed outcome for investors who loathe uncertainty but will be grappling with the repercussions of Brexit for years to come.
In Asia, Japan's Nikkei 225 index jumped 2.6% to 24,023.10 and Hong Kong's Hang Seng surged 2.6% to 27,687.76. The Shanghai Composite index advanced 1.8% to 2,967.68 and South Korea's Kospi climbed 1.5% to 2,170.25.
Australia's S&P ASX 200 picked up 0.5% to 6,739.70, while the Sensex in India added 1.0% to 40,994.58. Shares also rose in Taiwan and Southeast Asia.
The S&P 500 and Nasdaq set new highs on Thursday after President Donald Trump said the U.S. was getting close to a “big deal” with China.
Traders were also encouraged by a Wall Street Journal report saying Washington has offered to slash existing tariffs and cancel new ones set to kick in on Sunday in exchange for more agricultural purchases and intellectual property protection.
Markets have been quick to react to headlines and remarks out of the Trump administration about the 17-month trade war.
China's Foreign Ministry did not confirm a deal was almost ready. Officials in Beijing instead highlighted how far apart the two sides still are.
“Negotiations must be based on the principles of equality and mutual respect,” said a foreign ministry spokeswoman, Hua Chunying, repeating Beijing’s long-held position. “The deal must be mutually beneficial, a win-win.”
Meanwhile, Foreign Minister Wang Yi complained at a separate government-organized forum in Beijing that Washington is unfairly attacking China.
“The U.S. side has successively imposed unjustified restrictions and crackdowns on China in economy and trade, science and technology and personnel exchanges,” Wang said. “As far as China is concerned, what we are pursuing is our justified rights of development.”
Uncertainty over trade has been the biggest wildcard for stocks this year, hurting manufacturing around the world and causing U.S. businesses to hold back on making investments. The saving grace for the U.S. economy has been a strong job market and consumer spending.
Speculation that the world’s two biggest economies could be close to reaching an interim “Phase 1” trade agreement spurred investors on Thursday to move money into technology, industrial and other stock sectors that tend to do well when the economy is growing.
On Thursday, the S&P 500 climbed 0.9% to 3,168.57, about 0.5% above its last all-time closing high, on Nov. 27. The Dow Jones Industrial Average rose 0.8% to 28,132.05, while the Nasdaq gained 0.7% to 8,717.32. The index, which is heavily weighted with technology stocks, is about 0.1% higher than its record set on Nov. 27. The Russell 2000 index of smaller company stocks climbed 0.8% to 1,644.81.
Investors will get a look at new Commerce Department data Friday on U.S. retail sales in November. Economists expect retail sales rose last month. The measure gives more insight into consumer spending, which has been among the brighter spots in the economy helping to push growth.
Benchmark crude oil picked up 44 cents to $59.62 per barrel in electronic trading on the New York Mercantile Exchange. It rose 42 cents to settle at $59.18 a barrel on Thursday. Brent crude oil, the international standard, gained 60 cents to $64.80 a barrel.
The dollar rose to 109.64 Japanese yen from 109.32 yen on Thursday. The euro strengthened to $1.1173 from $1.1155.
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