Asian stock markets, pound climb in pre-Christmas rally

HONG KONG—The pound extended gains Thursday and equity markets mostly rose in a pre-Christmas rally as Britain and the European Union finally homed in on a Brexit trade deal, while traders brushed off concerns about the US stimulus package after Donald Trump slammed it.

After months of painful, stuttering talks, London and Brussels appeared on the verge of signing an agreement as they eventually found common ground on key sticking points.

The two sides were working on the final details of a deal early Thursday, ahead of what negotiators hoped would be a pre-dawn breakthrough, helped by a series of talks between Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen.

“Brexit work will continue throughout the night,” EC spokesman Eric Mamer tweeted just in the early hours.

“Grabbing some sleep is recommended to all Brexit-watchers at this point. It will hopefully be an early start tomorrow morning.”

An EU source told AFP that “if all goes well,” the two leaders should talk by phone at 0700 GMT to seal the agreement.

A French government source said UK negotiators had made “huge concessions” on fisheries—the main point of conflict that was holding up an agreement ahead of Britain’s departure at the end of next week.

Sterling, which has swung wildly in recent weeks as the talks ebbed and flowed, extended Wednesday’s rise of more than one percent against the dollar, while it was also holding similar gains against the euro.

“So, the never-ending ebb and flow of Brexit headline roistering might finally see closure on the most widely contested divorce in the history of humanity,” said Axi strategist Stephen Innes.

Optimism that the long-running saga could be at its endgame also provided a lift to European equities and Asia followed suit with all markets but Shanghai in positive territory.

However, Hong Kong’s gains were weighed by a fall of more than eight percent in Alibaba after China said it had launched a probe into the e-commerce titan for “suspected monopolistic practices,” while authorities were also holding “supervisory and guidance” talks with the firm’s financial services subsidiary Ant Group.

Several markets closed early for the Christmas holidays.

Equity gains, however, remain tethered by ongoing concerns about the surge in virus infections around the world that are forcing governments to impose fresh containment measures, offsetting hopes for the rollout of vaccines.

Analysts said that while Trump’s outburst against a $900-billion stimulus agreement was holding up help for American families, the general consensus is that a package will eventually be passed, and possibly with more cash handouts.

The president on Wednesday vetoed a huge defense bill, jolting investors on Wall Street, though there is a talk that lawmakers will override that with a two-thirds majority in both houses of Congress next week.

Trump did not indicate whether or not he will also veto the stimulus deal but Democrats, who had been pushing for a much bigger relief package, cheered his statement and said they would introduce a stand-alone measure to increase payments. With AFP