Sterling retreats, China signals weigh on stocks
SINGAPORE: Sterling retreated on Thursday on fears that Prime Minister Theresa May could lose control of parliament in Britain’s June 8 election, while conflicting signals on the health of China’s manufacturing sector kept most Asian stock markets in check.
European stocks, however, looked set to open on a more positive note, with financial spread-better CMC Markets expecting major markets to start the day up about 0.1 per cent.
Sterling fell 0.1 per cent to $1.2877 after a YouGov poll showed May could be well short of the number of seats needed to form a government, raising the prospect of political turmoil just as formal Brexit talks begin.
Other polls, however, show May winning a big majority.
The currency hit a near six-week low on Wednesday but recovered to close higher.
MSCI’s broadest index of AsiaPacific shares outside Japan was flat after four sessions of losses as investors took profits after stocks hit a two-year high last week and as economic and geopolitical concerns continued to weigh on sentiment.
Chinese shares fell as much as 0.5 per cent after a private survey showed the country’s manufacturing activity contracted in May for the first time in 11 months.
The findings contrasted with official data on Wednesday which suggested growth remained steady.
South Korea’s KOSPI fell 0.1 per cent and the Korean won fell 0.2 per cent to 1,120.67 won to the dollar after data showing factory activity shrank for the 10th straight month.
However, losses were limited by other data showing rising exports in May.
Factories across much of Asia ran into a soft patch in May as export demand slowed, according to business surveys, but analysts said the weakness was likely to be temporary amid signs of steady improvement in the global economy.
Manufacturing activity continued to improve in most of the region — albeit at a more modest pace — and business confidence remained strong overall.
“Most of emerging Asia’s manufacturing PMIs slipped in May but we doubt this marks the start of a significant downturn in Asian manufacturing,” Krystal Tan, Asia economist at Capital Economics, wrote in a note.
Japan’s Nikkei advanced 1 per cent after data showed recurring firstquarter corporate profits were the highest on record for the January to March period.
An increase in capital expenditure in the first quarter added to a raft of recent data pointing to economic expansion, while manufacturing growth in Japan also rose to a threemonth high, according to a business survey.
Overnight, Wall Street closed slightly lower as financials lost ground after JPMorgan and Bank of America warned of revenue weakness in the current quarter, but gains in defensive plays offset the decline.
All three major US indexes ended May in positive territory.
The dollar gained after touching a near two-week low against the yen overnight.
It was up 0.4 per cent to 110.06 yen on Thursday, its first positive session in five, but concerns about US politics capped gains.
President Donald Trump’s administration has been the focus of independent investigations by the Federal Bureau of Investigation and several congressional panels over alleged Russian meddling in the 2016 presidential election and potential collusion by the Trump campaign.
The House intelligence committee on Wednesday approved subpoenas for Trump’s former national security advisor and personal lawyer in connected with the Russian meddling probe.