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Monday 02:15 GMT

What you need to know

  • Pound drops after reports of no confidence in British PM
  • Hong Kong equities higher in otherwise poor Asia showing
  • Gaming company Razer jumps 41% on IPO debut
  • Oil holds above $63 a barrel

Hot topic

The pound lost ground after reports that a group of Conservative lawmakers had agreed to sign a letter of no-confidence in British Prime Minister Theresa May.

The British currency was down as much as 0.7 per cent at $1.3105 against the US dollar in early trading in Asia on Monday. It later trimmed its losses to be down 0.5 per cent on the day at $1.3122.

Westpac senior currency strategist Sean Callow attributed the pound’s fall to a report in The Times saying that 40 MPs had agreed to sign the letter amid concerns about Mrs May’s handling of Brexit.

Heading into the open of the markets in the UK, Mr Callow said it “wouldn’t be surprising to see some early London selling towards recent lows around $1.3085”.

However, he did not expect the currency to extend as far as its early November low of $1.3040.

Equities

Hong Kong equities were the standout in an otherwise poor start to the week for Asian markets, with the Hang Seng index 0.3 per cent higher.

Gaming company Razer’s shares climbed as much as 41.5 per cent on its first day of trading in Hong Kong. Chinese developer Country Garden rose 7.8 per cent following the announcement of its planned inclusion on the index. Cathay Pacific fell 1.3 per cent after losing its place in the index.

Asia-focused insurer AIA was up as much as 6.1 per cent on Beijing’s plans to ease limits on foreign ownership in China’s financial sector.

The Shanghai and Shenzhen composite indices added 0.3 per cent and 0.2 per cent respectively.

Outside of Hong Kong and China, equities in Asia mostly struggled after global markets edged lower on Friday amid uncertainty about the prospects for US tax cuts.

The Topix in Tokyo dropped 0.5 per cent as gains from energy and consumer stocks failed to offset declines from other segments. The Kospi index in Seoul was down 0.3 per cent. Sydney’s S&P/ASX 200 index was down 0.1 per cent.

Forex and fixed income

Regional currencies lost ground as the US dollar firmed. The dollar index, measuring the greenback against a basket of peers, was up 0.2 per cent.

The Australian dollar, down 0.2 per cent at $0.7648, was unscathed even as another politician resigned after revealing he had dual citizenship — in breach of the country’s constitution — eroding more support for Prime Minister Malcolm Turnbull’s parliamentary coalition.

The Japanese yen and the Korean won each weakened by 0.1 per cent, to ¥113.64 and Won1,121.15 respectively. The New Zealand dollar was flat at $0.6928.

In debt markets, yield on the US 10-year Treasury was down 1 basis point at 2.39 per cent, while those on the Australian and Japanese equivalent notes were 1bp higher at 2.619 per cent and 0.04 per cent respectively.

Commodities

The Saudi Arabian royal purge continued to support oil. Brent crude, the international benchmark, was flat at $63.55 a barrel. West Texas Intermediate, the US marker, was up 0.1 per cent at $56.80 a barrel.

Gold was unchanged at $1,276 an ounce.

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