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Research Market strategy
by Swissquote Analysts
Daily Market Brief

Asia swoons on trade crunch


Asia swoons on trade crunch

By Vincent Mivelaz

Asian equities tumbled, partially erasing gains from Monday’s euphoria over what seemed to be a trade truce between China and the USA. Hardest hit is the Hong Kong Hang Seng index, -1.62%, while Australian ASX 200 and South Korean Kospi declined by 0.78% and 0.62%. Japanese Nikkei 225 closed in a slight drop of 0.53% due to a relatively stable Yen. European shares are red across the board, led by UK’s FTSE 100 and the French CAC 40. This followed a meltdown in the US yesterday, with the Dow Jones Industrial Average down -3.10%, S&P 500 off 3.24% and Nasdaq sliding 3.80%. Investors are switching towards US treasuries, with 30-year, 10-year and 2-year treasury yields down 2.48%, 1.89%, 0.93%. EUR/USD remains in neutral territory, trading at 1.1343 and approaching 1.1315 short-term.

Pound pounded by Brexit chaos

By Vincent Mivelaz

Ahead of next Tuesday’s vote on Brexit, we expect the British pound to remain under pressure and highly sensitive to headlines. Short-term, we expect EUR/GBP, currently trading at 0.8906, to head along 0.8889.

Parliamentary debate has intensified. Support for Prime Minister May is weakening. An amendment was passed that gives Parliament the final decision over Plan B, should May’s draft agreement be rejected. Most MPs are unwilling to leave the European Union without a deal, but if May’s plan is rejected, time will be short for alternatives. Now on the table are proposals to delay Brexit or even to reverse it. Even insiders are unsure how this will play out.