World shares rally ahead of vote on Brexit deal
Global shares were mostly higher Tuesday as British lawmakers prepared to vote on a Brexit deal that has drawn strong opposition at home. Markets were also boosted by senior economic officials saying Beijing will cut taxes and keep monetary policy flexible to help weather China’s slowdown.
KEEPING SCORE: In Europe, Britain’s FTSE 100 rose 0.3 percent to 6,874.44. Germany‘s DAX rose 0.7 percent to 10,927.59 and the CAC 40 in France added 0.9 percent to 4,803.90. Wall Street was set for an optimistic open. Dow futures gained 0.5 percent to 23,986.00 and the broader S&P 500 futures was up 0.4 percent at 2,591.80.
BREXIT VOTE: British lawmakers will begin to vote later Tuesday on a Brexit deal brokered between Prime Minister Theresa May and other European leaders. It will likely be rejected despite a last-minute push by May, who claims to have gotten reassurances with “legal force” on key issues. May told lawmakers that rejecting the deal may lead to an overturning of the 2016 referendum, or Britain leaving the European Union on March 29 without any deal, which economists believe would batter the British economy.
ANALYST’S TAKE: “With a lack of an option B, the vote could narrow down the possibility to a hard-Brexit or a no-Brexit that could be the next step for the timed Brexit journey,” Jingyi Pan of IG said in a market commentary.
CHINA ECONOMY: Mainland Chinese company shares surged after senior economic leaders, briefing reporters Tuesday on the outcome of an annual policy-setting meeting last month, pledged to keep the monetary policy of the world’s No. 2 economy flexible but stable and to support growth with improved access to financing for private and smaller enterprises. The assurances came as China weathers its worst slowdown since the global financial crisis amid a punishing tariffs dispute with the U.S.
CHINESE TRADE: On Monday, China reported that its exports to the U.S. fell 3.5 percent from a year earlier in December to $40.3 billion, although its overall trade surplus with the United States surged last year. Markets initially slipped on worries that tariffs were putting a drag on the world’s second-largest economy. But buying enthusiasm recovered on hopes that Chinese negotiators will be more keen to resolve a trade dispute with the United States. Chinese Vice Premier Liu He is set to lead negotiators at talks in Washington later this month.
ASIA’S DAY: Japan’s Nikkei 225 index, reopening after a market holiday, added 1 percent to 20,555.29. The Kospi in South Korea jumped 1.6 percent to 2,097.18. Hong Kong’s Hang Seng rebounded 2 percent to 26,830.29. It closed 1.4 percent lower on Monday. The Shanghai Composite index was up 1.4 percent at 2,570.34 and Australia’s S&P ASX 200 rose 0.7 percent to 5,814.60. Shares rose in Taiwan, Singapore and Indonesia, but fell in the Philippines.
ENERGY: Benchmark U.S. crude oil added 46 cents to $50.97 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.08 to settle at $50.51 per barrel on Monday. Brent crude, the international standard, gained 45 cents to $59.44. It gave up $1.49 to $58.99 a barrel in London.
CURRENCIES: The dollar strengthened to 108.55 yen from 108.16 late Monday. The euro eased to $1.1459 from $1.1473.