Global Equity Investors Show Little Concern Over Brexit Delay

On Saturday, Bank of Japan Governor Haruhiko Kuroda said the BOJ will “certainly” reduce short- to medium-term interest rates if needed to ease monetary policy. This suggests that deepening negative rates will be the primary tool to fight heightening overseas risks.
James Hyerczyk
Asian, European, US Shares

The major Asia Pacific stock indexes closed marginally higher on Monday. European stocks improved and U.S. shares are expected to open better as investors wait to discover whether the U.K.’s departure from the European Union will be delayed once again.

Over the weekend, U.K. Prime Minister Boris Johnson was begrudgingly forced to request an extension to the current October 31 Brexit deadline on Saturday, according to CNBC, after a cross-party group of lawmakers passed an amendment forcing a delay to a “meaningful” vote on his newly negotiated divorce deal.

In the Asian cash market, Japan’s Nikkei 225 Index settled at 22548.90, up 56.22 or +0.25%. Hong Kong’s Hang Seng Index finished at 26725.68, up 6.10 or +0.02% and South Korea’s KOSPI Index closed at 2064.84, up 4.15 or +0.20%.

China’s Shanghai Index settled at 2939.62, up 1.48 or +0.05% and Australia’s S&P/ASX 200 Index finished at 6652.50, up 2.80 or +0.04%.

Other Asian Market News

On Saturday, Bank of Japan Governor Haruhiko Kuroda said the BOJ will “certainly” reduce short- to medium-term interest rates if needed to ease monetary policy. This suggests that deepening negative rates will be the primary tool to fight heightening overseas risks.

Early Monday, a report showed Japan’s exports contracted for a 10th straight month in September, adding to speculation the central bank could ease monetary policy as soon as next week to support an economy hit by a slowdown in global demand.

Exports in September slumped 5.2% from a year earlier, Ministry of Finance data showed on Monday, dragged down by car and airplane parts to the United States and semiconductor production equipment to South Korea.

The fall was larger than a 4.0% drop expected by economists and marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.

European Shares Nudge Higher

The pan-European Stoxx 600 edged 0.2% above the flatline in early trade, with banks and insurance stocks gaining more than 1% each while healthcare and household goods both shed 0.4%.

At 10:01 GMT, London’s FTSE 100 Index is at 7165.57, up 15.00 or +0.21%. Germany’s DAX Index is trading 12715.18, up 81.58 or +0.65% and France’s CAC Index is at 5644.06, up 7.81 or +0.14%.

Other European Market News

Traders are saying that Mario Draghi’s last meeting as European Central Bank chief this Thursday may prove a lively gathering given a deep rift among policymakers over renewed asset purchases that threatens the effectiveness of policy.

Deep divisions have emerged among policymakers over reviving bond purchases, meaning the ECB chief’s final news conference may prove a heated affair.

US Markets Called Higher

U.S. shares are trading higher as investors reacted to upbeat comments from China. On Friday, Chinese Vice Premier Liu He said Beijing would work with the U.S. to address one another’s trade concerns. China’s chief negotiator in the trade talks also said that stopping the trade war would be good for both countries as well as the global economy.

In corporate news, Halliburton, Lennox International and PetMed Express are all set to report earnings before the opening bell.

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