Asian stocks rose for the
first time in three days on Tuesday while sterling and other currencies
advanced as investors scooped up beaten down assets after Britain's vote to
exit the European Union stunned financial markets.
European markets looked set
to follow Asian stocks higher, according to financial bookmakers, and U.S.
stock futures ESc1 rose 0.8 percent, suggesting a stronger opening on Wall
Street after a brutal two-day slide.
MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.1 percent but the tiny
gain belied an impressive turnaround which saw the Japanese stocks .N225 rally
more than 3 percent from the day's lows, pulling other Asian markets higher.
The Nikkei was up 0.6 percent by early afternoon.
But in a sign that investors
remained extremely nervous, trading volumes were light and price action was
choppy across markets.
"Short-covering in the
currency market and U.S. futures market is limiting selling," said Yutaka
Miura, senior technical analyst at Mizuho Securities. "But overall
sentiment remains fragile."
"Friday's Brexit jump
scare has faded, but markets are still worried" about its possible effect
on global demand, SLW brokerage trader João Paulo de Gracia Corrêa said.
Policymakers from Japan to
China vowed to protect their economies and markets from the destabilizing
impact of Brexit.
"It's hard to avoid
short-term volatility in China's capital markets, but we won't allow
roller-coaster rides and drastic changes in the capital markets," Premier
Li Keqiang said at the World Economic Forum (WEF) in the city of Tianjin.
In currency markets,
sterling GBP=D4 was changing hands at $1.3291, after falling to a three-decade
low of $1.3122 on Monday, its weakest since 1985.
Against the yen, sterling
rose 1 percent to 135.54 GBPJPY=R, not far from Friday's 3-1/2 year low of
133.18. The euro stood at 82.93 pence EURGBP=R after scaling a two-year peak of
83.79 pence on Monday.
The euro edged down slightly
to $1.1060 EUR=, not far above Friday's three-month low of $1.0912 after the
British vote.
"In the near term, risk
aversion and market uncertainty makes the euro less attractive to
investors," Kathy Lien, managing director of foreign exchange strategy at
BK Asset Management, wrote in a note to clients.
"In the long run,
Brexit also raises questions about the Eurozone's viability because if major
countries like Britain start dropping out the EU, nationalism could drive
smaller Eurozone nations to exit out of the euro," she said, adding that
she expects the euro to "make another run" for the $1.0900 level.
Early signs of a cautious
return in demand for riskier assets were evident in the high-yielding Aussie
AUD=D3 and the New Zealand dollar NZD=, which helped put a floor under other
emerging market currencies in Asia.
Anticipating yet another
round of global policy easing by major central banks, government bond yields
pushed deeper into negative territory. Yields on ten-year and 20-year Japanese
debt plunged to fresh record lows.
Gold XAU=, one of the rare
outliers in global financial markets in the last few days, came in for a bit of
profit taking with the precious metal down 0.7 percent. Silver XAG= fell 0.3
percent.
Crude oil prices regained
some of their overnight losses after tumbling nearly 3 percent on Monday. [O/R]
U.S. crude CLc1 added 1.7
percent to $47.11 a barrel after shedding 2.8 percent on Monday, while Brent
LCOc1 rose 1.6 percent to $47.89 after skidding 2.6 percent and touching
seven-week lows overnight.
Credit:Reuters
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