Sterling falls on new Brexit fears, stocks edge higher

By Herbert Lash NEW YORK (Reuters) - The dollar rose on Tuesday amid concerns about a hard deadline for Britain to reach a new trade deal with the European Union, while global equity markets edged higher, lifted by a resurgent U.S. housing market that bodes well for the economy. European stocks fell from record highs and sterling dropped more than 1% as reports that British Prime Minister Boris Johnson was set to put a no-deal EU exit back on the table

Reuters December 18, 2019 02:05:37 IST
Sterling falls on new Brexit fears, stocks edge higher

Sterling falls on new Brexit fears stocks edge higher

By Herbert Lash

NEW YORK (Reuters) - The dollar rose on Tuesday amid concerns about a hard deadline for Britain to reach a new trade deal with the European Union, while global equity markets edged higher, lifted by a resurgent U.S. housing market that bodes well for the economy.

European stocks fell from record highs and sterling dropped more than 1% as reports that British Prime Minister Boris Johnson was set to put a no-deal EU exit back on the table.

Johnson will use his control of parliament after last week's resounding election victory to ban any extension of the Brexit transition period beyond 2020, a bold move that spooked markets.

The pound traded at $1.3117, down 1.59% on the day, while a profit warning from consumer goods giant Unilever sent its shares tumbling more than 7% and helped push the broader European STOXX 600 index <.STOXX> down 0.68%.

U.S.-China trade optimism and reassuring Chinese economic data had driven Asian and emerging market stocks to 18-month highs overnight, but stocks tumbled in Europe when markets in London, Frankfurt and Paris opened. [.EU]

Renewed uncertainty over Britain's departure from the EU on Jan. 31 failed to carry through to Wall Street. Data showing U.S. homebuilding increased more than expected in November as permits for future home construction surged to a 12-1/2-year high lifted U.S. stocks, albeit modestly.

The S&P 500 eked out a new high, up 28% year to date.

Cash dividends for the benchmark index are set to post a new quarterly record, passing the $500 billion mark for the first time, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Dividend growth, which has declined, remains significantly higher than wage growth, he said.

Evidence of a global economic revival is becoming increasingly clear, said Jim Paulsen, chief investment strategist at Leuthold Group in Minneapolis, citing U.S., Chinese and European data.

"The financial markets are just being bombarded by great economic reports this week," he said.

Paulsen pointed to U.S. manufacturing output rebounding more than expected in November, up 1.1%, while industrial output also rose 1.1% last month, according to the Federal Reserve.

The Dow Jones Industrial Average <.DJI> rose 62.89 points, or 0.22%, to 28,298.78. The S&P 500 <.SPX> gained 3.53 points, or 0.11%, to 3,194.98 and the Nasdaq Composite <.IXIC> added 9.41 points, or 0.11%, to 8,823.64.

Stock markets in Shanghai, Hong Kong and Seoul all gained more than 1% and MSCI's all-country world index <.MIWD00000PUS> set a record high, putting its gains for 2019 at almost 23%, its best year in a decade and the fourth-best year ever.

The Australian dollar also came under pressure after the minutes of this month's Reserve Bank of Australia meeting suggested the central bank might cut interest rates again when it next meets in February.

The RBA has already cut three times since June, taking rates to a record low of 0.75%.

The dollar index <.DXY> rose 0.21%, with the euro up 0.04% to $1.1146. The Japanese yen was flat versus the greenback at 109.52 per dollar.

U.S. Treasury yields traded little changed as investors eyed government debt despite the strong U.S. housing data.

The benchmark 10-year U.S. Treasury note yielded 1.8906%. Euro zone bond yields fell after the British government signalled it was ready to negotiate hard in talks on a trade deal with the EU.

British gilt yields fell further than elsewhere on the latest Brexit worries. The 10-year bond yield dropped 5 basis points to 0.777% .

Most 10-year euro zone bond yields were 1 to 2 basis points lower , with Germany's 10-year yield at -0.285%, far off a six-month high of -0.217%.

Oil prices rose more than 1%, supported by hopes last week's preliminary U.S.-China trade deal will bolster demand in 2020, after the prolonged dispute between the world's two largest economies dented global growth and market sentiment.

Brent crude , the global benchmark, settled up 76 cents at $66.10 a barrel, while U.S. West Texas Intermediate crude added 73 cents to settle at $60.94 a barrel.

Palladium, which is widely used in catalytic converters for car and truck exhausts, remained a focus, though, as it sped toward $2,000 an ounce for the first time.

Gold prices were steady.

U.S. gold futures settled mostly unchanged at $1,480.60 an ounce.

(Reporting by Herbert Lash; Editing by Dan Grebler)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.