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Asian stocks eye gains as Brexit deal hopes grow

Randy Mancini 53 December 23, 2020

December 24, 2020

By John McCrank

NEW YORK (Reuters) – Asian shares were set to rise on Thursday ahead of the Christmas break, as global investors cheered a potential Brexit deal and economic recovery prospects, largely ignoring U.S. President Donald Trump’s threat to veto a long-awaited COVID aid package.

Australia’s S&P/ASX 200 was up 0.78% in early trading, while Japan’s Nikkei 225 futures were up 0.07%, and Hong Kong’s Hang Seng index futures inched up 0.17%.

Investors cheered a potential Brexit trade deal between Britain and the European Union that raised hopes the estranged allies would avoid a turbulent economic rupture on New Year’s Day.

“The framework for a Brexit trade deal gave investors the green light to start buying everything in Europe,” said Edward Moya, Senior Market Analyst, at OANDA in New York.

The potential for a Brexit deal boosted sterling, which was up 0.13% against the dollar at $1.3509 after closing up 0.9%. The pound also drew support after France lifted its ban on freight coming from Britain, which it had enacted in response to a fast-spreading COVID-19 variant in the United Kingdom.

MSCI’s gauge of global stocks was up 0.02%, having given back some earlier gains in thin holiday trading.

Wall Street ended mostly higher, with the Dow Jones Industrial Average closing up 0.38% and the S&P 500 edging 0.07% higher. The Nasdaq Composite declined 0.29%.

A raft of mixed U.S. economic data showed lower jobless claims and an uptick in new orders for durable goods, but also a pullback in consumer spending, falling personal income and fading sentiment as the holiday shopping season nears its end amid a resurgent pandemic.

Investors largely shrugged off comments by President Trump saying a nearly $900 billion stimulus bill, agreed upon after months of wrangling in Congress, was “a disgrace” that he might not sign. Trump said he wanted to increase “ridiculously low” $600 payments for individuals to $2,000, in a video posted to Twitter.

“Risk-on sentiment is guiding markets so far today and it appears to be weighted more toward possible optimism toward a Brexit deal and the cherry-picked parts of U.S. releases, rather than Trump’s reckless antics over signing the stimulus and funding bill,” said Derek Holt, head of capital markets Economics at Scotiabank.

Oil prices settled more than 2% higher as draws in U.S. inventories of crude, gasoline and distillates lifted investors’ hopes for some return in fuel demand. Brent crude futures were recently up 2.08% to $51.12 a barrel, while U.S. West Texas Intermediate crude futures were flat at $48.12 a barrel.

(Reporting by John McCrank, additional reporting by April Joyner; Editing by Sam Holmes)