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Asia shares stumble, sterling at mercy of yet another vote


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FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS

SYDNEY (Reuters): Asian shares drifted lower on Wednesday as a risk-off mood settled on markets, while a frazzled pound awaited its fate ahead of yet another make-or-break parliamentary vote on Brexit.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.45% in slow trade.

Japan’s Nikkei led the retreat with a fall of 1.2% as data showed domestic machinery orders fell in January at the fastest pace in four months.

Shanghai blue chips slipped 0.5% following two days of gains. E-Mini futures for the S&P 500 were off 0.2% and spread betters pointed to opening losses for the main European bourses.

Risk appetites had soured after British lawmakers crushed Prime Minister Theresa May’s European Union divorce deal, forcing parliament to decide within days whether to back a no-deal Brexit or seek a last-minute delay.

Lawmakers voted against May’s amended Brexit deal by 391 to 242 as her last-minute talks with EU chiefs on Monday to assuage her critics’ concerns ultimately proved fruitless.

Parliament will vote later Wednesday on whether to leave the EU with no deal, and if that fails, a further vote on Thursday will decide whether to extend the Brexit deadline.

“The vote today seems certain to go against the government as well,” said David de Garis, a director of economics and market at National Australia Bank.

“Assuming the Thursday vote finds a majority in favor of an extension - as we expect - it will likely be of some comfort to sterling,” he added. “It’s still a fast moving environment, with political pressure at understandably extreme levels.”

The pound could do with some comfort after a wild couple of sessions. It was last at $1.3089 GBP=, having been as high as $1.3296 and as low as $1.3017 so far this week.

 

US inflation slows

On Wall Street, Boeing Co shed another 6.1% for its biggest two-day drop since June 2009, as more countries grounded the company’s 737 MAX 8 planes following Sunday’s crash in Ethiopia, the second fatal crash in months.

The drop in Boeing pushed the Dow down 0.38%, even as the S&P 500 gained 0.30% and the Nasdaq added 0.44%. 

A soft US inflation report for February burnished bonds while tarnishing the dollar. Annual consumer price inflation slowed to its lowest since September 2016 at 1.5%.

The data merely reinforced expectations the Federal Reserve will stay patient on rates and could even sound more dovish at its policy meeting next week.

 


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