Asia stocks digest meaty gains, sterling starved for love

Wayne Cole, Reuters

Posted at Dec 20 2019 08:50 AM

A woman points to an electronic board showing stock prices at the Tokyo Stock Exchange. Reuters/file

SYDNEY -- Asian shares snoozed near 18-month highs on Friday as trade thinned in the run-up to Christmas and investors seemed content to digest the chunky gains already made so far this month.

MSCI's broadest index of Asia-Pacific shares outside Japan was a fraction firmer in early trade, having gained 1.2 percent for the week so far and almost 5 percent for the month.

Japan's Nikkei inched up 0.1 percent after reaching a 14-month top earlier in the week. It was ahead by 2.5 percent for the month so far. South Korea's market added 0.25 percent on the day and 5.5 v for December.

E-Mini futures for the S&P 500 held at all-time highs having put on 1.2 percent for the week.

Sentiment had been bolstered after US Treasury Secretary Steven Mnuchin said the United States and China would sign their Phase One trade pact in early January.

Mnuchin said it was completely finished and just undergoing a technical "scrub," though Beijing has so far dodged all details of the deal.

The US House of Representatives also overwhelmingly approved a new North American deal that leaves $1.2 trillion in annual US-Mexico-Canada trade flows largely intact.

The S&P 500 hit a sixth straight record high, its longest streak since January 2018, and the Nasdaq climbed for the seventh session in a row. The S&P 500, Nasdaq and Dow all notched record closing highs.

The Dow ended Thursday up 0.49 percent, while the S&P 500 gained 0.45 percent and the Nasdaq 0.67 percent.

The market shrugged off US President Donald Trump's impeachment, as the Republican-controlled Senate is widely expected to keep him in office.

POUND IN PERIL

It was mostly quiet in currencies, though sterling was nursing a grudge after suffering a vicious reversal that left it facing its worst weekly fall since late 2017 at 2.4 percent.

Early Friday, the pound was huddled at $1.3017 having toppled from a $1.3514 peak when Prime Minister Boris Johnson used his sweeping election victory to revive the risk of a hard Brexit.

"We see the biggest risks being to GBP/USD depreciation over the next two weeks as Brexit preparations take place amidst the most sluggish UK economy in 10 years," said Richard Grace, chief currency strategist at CBA.

"GBP can fall because the trade concerns are taking place at a time when the UK trade deficit is the widest it has been in 10 years, and the current account deficit is at a historically large 5 percent of GDP."

Other currency pairs were little changed on the week with the euro stuck at $1.1124 having found support around $1.1100. The dollar idled at 109.36 yen, having spent the entire week in a tight 10917/109.67 range.

Against a basket of currencies, the dollar had edged up 0.2 percent for the week to 97.393 thanks mainly to the steep drop in sterling.

Spot gold was flat at $1,479.00 per ounce, and up just a fraction for the week so far.

Oil prices consolidated after reaching the highest level in 3 months, buoyed by falling crude inventories and the easing in US-China trade tensions.

Early Friday, US crude had eased back 11 cents to $61.07 a barrel, while Brent crude futures were yet to trade.