SEOUL, South Korea – Global stock markets were higher on Wednesday as the confirmation of Britain’s new leader eased uncertainties, while the stimulus hopes in Britain and Japan also helped lift stocks.
KEEPING SCORE: Europe started with moderate gains. Britain’s FTSE 100 rose 0.2 per cent to 6,696.04 and France’s CAC 40 added 0.4 per cent to 4,350.17. Germany’s DAX was flat at 9,967.47. Futures augured a tepid start on Wall Street. Dow futures remained flat, while S&P futures inched up 0.1 per cent.
ASIA’S DAY: Asian stocks finished higher. Tokyo’s Nikkei 225 rose 0.8 per cent to 16,231.43 and South Korea’s Kospi gained 0.7 per cent to 2,005.55. Hong Kong’s Hang Seng index rose 0.5 per cent to 21,322.37. Australia’s S&P/ASX 200 advanced 0.7 per cent to 5,388.50. Stocks in mainland China, Singapore and Indonesia and other Southeast Asian countries also closed higher.
ANALYST’S TAKE: “Market sentiment has improved as Britain’s new prime minister has been confirmed and thus substantially reduced the political uncertainties following the Brexit vote,” said Margaret Yang, a market analyst at CMC Markets Singapore, referring to Britain’s vote last month to leave the European Union. “Although there is still a lack of clues as to when negotiations will start and the new terms of the UK’s relationship with the EU still remain uncertain, at least now we know there is a plan and the road map is clearer.”
UK WATCH: Britain’s Conservative Party confirmed that Theresa May has been elected party leader and will become the next prime minister. David Cameron is making his final appearance in the House of Commons as prime minister on Wednesday, stepping down less than three weeks after losing the campaign to keep Britain in the European Union. The confirmation of the new leader sent the British pound higher.
CENTRAL BANK WATCH: Analysts said market expectations for the British central bank’s first rate cut also rose sharply after Britain’s new leader was confirmed. Most economists expect the Bank of England to look to stimulate the British economy at a policy meeting on Thursday, with some expecting the central bank to reduce its benchmark interest rate to a new record low from the current 0.5 per cent, where it has been since March 2009. In Japan, stocks extended gains after Prime Minister Shinzo Abe’s Liberal Democratic Party emerged victorious from parliamentary elections, driven by the hopes that Abe would continue to flood the markets with money by expanding bond purchases.
OIL: Benchmark U.S. crude fell 59 cents to $46.21 per barrel in New York. The contract added $2.04 to close at $46.80 a barrel on Tuesday. Brent crude, a standard for international oil prices, lost 82 cents to $47.65 a barrel in London.
CURRENCIES: The dollar fell to 104.57 yen from 104.84 yen. The euro weakened to $1.1076 from $1.1063.