Stocks, British pound get Brexit lift, Alibaba hit by China probe

British and EU negotiators have closed in on a trade deal with just days to go before UK’s formal exit from their trading arrangement.

Stocks and other assets rose on hopes of a trade deal between the UK and European Union [File: Dado Ruvic/Reuters]

Asian shares and the British pound rose on Thursday ahead of the Christmas break, as the United Kingdom and the European Union closed in on a free trade deal and investors placed bets on global economic recovery prospects.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.45 percent. Australian stocks ended 0.33 percent higher, while Tokyo shares rose 0.45 percent.

Chinese stocks fell 0.28 percent.

Alibaba Group Holding Ltd shares slumped 8.13 percent, its biggest daily drop in six weeks, after China’s market regulator said it will investigate the tech giant for suspected monopolistic behaviour.

United States stock futures edged up by 0.16 percent.

FTSE futures were up 0.56 percent. Euro Stoxx 50 futures were up 1.15 percent, while German DAX futures rose 1.28 percent, pointing to a bright start to the European session.

Investors cheered news that the UK and the EU were on the cusp of striking a narrowly focused trade deal on Thursday that would help them avoid a turbulent economic rupture on New Year’s Day.

Hopes for more fiscal spending and expectations that coronavirus vaccines will become more available next year also supported global equities.

“A pro-risk and weak dollar theme dominated markets on optimism regarding vaccines, US and UK fiscal stimulus, and Brexit, with hope an agreement on the latter can be reached before Christmas,” ANZ Bank analysts wrote in a research memo.

The potential for a Brexit deal boosted sterling, which rose 0.47 percent to $1.3558. The pound edged up to 90.05 pence per euro.

The pound also drew support after France lifted its ban on freight coming from the UK, which it had enacted in response to a more contagious coronavirus variant in the UK.

UK pound vs US dollar daily percentage change [Bloomberg]

MSCI’s gauge of global stocks was up 0.12 percent, but moves were subdued in thin holiday trading.

Alibaba, co-founded by Chinese billionaire Jack Ma, was the stock to watch in Asia on Thursday as Chinese authorities stepped up their campaign against big technology companies.

Separately, Ant Group, the mobile payments and consumer credit arm of Ma’s tech empire, said it will comply with all regulatory requirements after China’s financial watchdogs said they will conduct regulatory talks with it in coming days.

Last month, China halted Ant Group’s $37bn dual-listing initial public offering, crushing what would have been the world’s largest stock market debut.

Wall Street ended mostly higher on Wednesday, with the Dow Jones Industrial Average closing up 0.38 percent and the S&P 500 edging 0.07 percent higher. The Nasdaq Composite declined 0.29 percent.

A raft of mixed US economic data showed lower jobless claims and an uptick in new orders for durable goods, but also a pullback in consumer spending, falling personal income and fading sentiment as the holiday shopping season nears its end amid a resurgent pandemic.

Investors largely shrugged off comments by US President Donald Trump that a nearly $900bn stimulus bill, agreed upon after months of wrangling in Congress, was “a disgrace” that he might not sign.

“Risk-on sentiment is guiding markets so far today and it appears to be weighted more toward possible optimism toward a Brexit deal and the cherry-picked parts of US releases, rather than Trump’s reckless antics over signing the stimulus and funding bill,” said Derek Holt, head of Capital Markets Economics at Scotiabank.

Brent crude futures rose 38 cents to $51.58 a barrel by 05:30 GMT, while US West Texas Intermediate crude increased 31 cents to $48.43, buoyed by a drawdown in US stockpiles and a potential Brexit trade deal.

Source: Reuters