Asian Stocks Capped by Brexit Vote, Supported by Possible China Stimulus
The major Asian stock indexes are trading mixed early Wednesday’s, with investors ignoring the strong performance on Wall Street on Tuesday. Investors are reacting to fresh news on the U.K.’s plan to exit from the European Union. Despite the early setback, the market remains underpinned by positive sentiment from China.
At 0219 GMT, Japan’s Nikkei 225 Index is trading 20385.86, down 169.43 or -0.82%. Hong Kong’s Hang Seng Index is at 26712.30, down 117.99 or -0.44%. South Korean’s KOSPI Index is at 2097.48, up 0.30 or +0.01%. Australia’s S&P/ASX 200 Index is trading 5819.00, up 4.40 or +0.08% and China’s Shanghai Index is at 2569.76, down 0.59 or -0.02%.
Brexit Concerns Weighing on Major Indexes
Investors are assessing fresh uncertainties surrounding the U.K,’s withdrawal from the European Union after Prime Minister Theresa May’s plan on how Britain should exit the EU was overwhelmingly voted down in the House of Commons, which is the U.K.’s lower house of parliament. Trader response has been limited so far because the move was widely expected.
According to reports, the British government now has just three working days to map out a new plan of action. However, it is not expected to achieve much given the size of the opposition to the plan. Reports suggested it was the largest defeat for a sitting government in U.K. political history.
The news isn’t expected to have that much of an effect on the stock market unless it leads to a change in government, or the UK decides to exit the EU without a deal, which is defined as a hard Brexit.
Possible China Stimulus Supportive
Despite the Brexit news, Asian stock markets remain supported by positive sentiment to China signaling more stimulus measures to come, including larger tax cuts, amid concerns of a slowdown in the world’s second-largest economy.
Continuing to provide support is the hope that the United States and China would soon reach a trade agreement, following last week’s positive outcome from last week’s mid-level trade talks and speculation of higher-level talks planned for later in the month in Washington.
Technology Stocks Carry U.S. Stock Market
The major U.S. equity indexes rose on Tuesday with the rally led by a strong performance in technology-related companies.
The blue chip Dow Jones Industrial Average was pressured early after J.P. Morgan Chase reported lower-than-expected profit for the fourth quarter. However, it erased all of its earlier gains to close higher for the session after technology shares rose sharply on the news that Netflix would hike its monthly membership prices. Shares of Netflix jumped 6.5 percent after the report, putting enough upward pressure on Facebook, Amazon, Apple and Alphabet to post more than 2 percent gains.
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