Pound jumps as Brexit vote fails; stocks rise on China hopes
Reuters
Published Jan 15, 2019 04:00PM ET
Pound jumps as Brexit vote fails; stocks rise on China hopes
By Caroline Valetkevitch
NEW YORK (Reuters) - Sterling rebounded from the day's lows on Tuesday after British lawmakers defeated Prime Minister Theresa May's deal on withdrawing from the European Union, and major world stock markets climbed on hopes of more stimulus for China's economy.
Sterling rallied more than a cent to stand above $1.28 after the vote. It
May's crushing loss, the first British parliamentary defeat of a treaty since 1864, marks the collapse of her two-year strategy of forging an amicable divorce maintaining close ties to the EU after the March 29 exit.
"After the big defeat, which was even larger than what the market had expected, we might getting closer to a no-Brexit scenario. The pound has retraced some of its losses after that vote which was not unexpected. It may also simply be short-covering," said Eric Stein, co-director of global income group at Eaton (NYSE:ETN) Vance in Boston.
"There is still a massive amount of uncertainty for U.K. assets," he said.
On Wall Street, stocks rose further after initially paring gains on the Brexit vote.
Helping stock sentiment, U.S. President Trump talked up chances of a China trade deal and Chinese officials hinted at more stimulus for their slowing economy.
Data on Monday showed China's exports unexpectedly fell the most in two years in December, while imports also contracted sharply.
"Any move to stabilize the global economy by the Chinese should be viewed positively by the U.S. as well," said Chris Zaccarelli, Chief Investment Officer, Independent Advisor Alliance in Charlotte, North Carolina.
A more-than-6 percent gain in shares of Netflix (O:NFLX) after it said it was raising rates for its U.S. subscribers helped boost stocks, while JPMorgan Chase & Co (N:JPM)'s shares were up slightly despite reporting a lower-than-expected rise in quarterly profit and revenue, hurt by weakness in bond trading.
The Dow Jones Industrial Average (DJI) rose 119.83 points, or 0.5 percent, to 24,029.67, the S&P 500 (SPX) gained 23.65 points, or 0.92 percent, to 2,606.26 and the Nasdaq Composite (IXIC) added 107.30 points, or 1.55 percent, to 7,013.21.
The pan-European STOXX 600 index (STOXX) rose 0.35 percent and MSCI's gauge of stocks across the globe (MIWD00000PUS) gained 0.74 percent.
Germany reported its weakest growth in five years, causing the euro to decline against the dollar.
The euro (EUR=) was last down 0.56 percent, at $1.1410, while Europe's broad FTSEurofirst 300 index (FTEU3) added 0.47 percent, to 1,373.38.
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In commodities, oil prices rebounded on supply cuts by producer club OPEC and Russia.
U.S. Treasury yields were mostly little changed amid negative external factors such as weak European data and concerns over the Brexit deal. Benchmark 10-year notes (US10YT=RR) last fell 2/32 in price to yield 2.7166 percent, from 2.71 percent late on Monday.
Written By: Reuters
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