UK Decisions Push Global Markets
A decision by the European Commission to agree to changes in the Brexit deal have pushed Asian shares higher. The decision taken on Monday came in advance of today’s vote by the British parliament on Brexit-related issues. The British pound soared on the news, and was trading up 0.45 percent as of 1:55 p.m. HK/SIN, to $1.3208. The currency had soared 0.8 percent earlier in the session before retreating slightly. During the rally it hit its strongest level against the euro since mid-2017. The pound has gained more than 1.5 percent in the past 2 trading days.
The decision is legally binding and includes three assurances from the EU; a joint instrument, a join statements, and a unilateral declaration, all of which were drafted with the express goal of addressing the Irish backstop, which has long been the thorniest part of the Brexit deal. The backstop is an insurance policy to avoid control of the border between the British Northern Ireland and Ireland, which is an EU member state. Though the decision has been widely glorified, skeptics are concerned that it will create long-lasting connections between the United Kingdom and the EU, the very thing that Brexit was trying to avoid.
Global Stock Markets Head Higher
Asian markets were broadly higher on Tuesday, reversing some of the losses incurred last week, and following a very positive day on Wall Street on Monday. Japan’s Nikkei 225 was up 1.89 percent in the mid-afternoon and Hong Kong’s Hang Seng Index was up 1.17 percent. China’s benchmark indexes were also both trading in positive territory, with the Shanghai Composite up 1.22 percent and the Shenzhen Composite up 0.56 percent. Only Australia’s ASX 200 bucked the trend, trading down a modest 0.09 percent.
The amended Brexit plan encouraged investors to seek riskier assets, a move which also boosted U.S. Treasury bonds. The benchmark 10-year Treasury notes were trading at 2.6645 percent on Tuesday, up from 2.641 percent the previous day.