Pound jumps to 6-month high on snap British election but Asian stock markets cautious

The pound stole the show in Asia on Wednesday (April 19) amid speculation Britain's surprise decision to call a snap election could ultimately deliver a more market-friendly outcome in its divorce from the European Union.
The pound stole the show in Asia on Wednesday (April 19) amid speculation Britain's surprise decision to call a snap election could ultimately deliver a more market-friendly outcome in its divorce from the European Union.PHOTO: BLOOMBERG

SINGAPORE - Many Asian markets took the lead from Tuesday's weak Wall Street and ended in the red on Wednesday, while the pound rallied on the back of the British election announcement.

Markets were also on edge amid news of increasing tensions in the Korean peninsula and awaiting the outcome of an unpredictable French election.

Hong Kong fell 0.4 per cent, Sydney dropped 0.6 per cent, Seoul slipped 0.5 per cent and Singapore's Straits Times Index lost 0.4 per cent.

Shanghai tumbled 0.8 per cent, with analysts saying that increased scrutiny by regulators on speculative trading activity has been a further dampener on the market.

The pound stole the show in Asia on Wednesday (April 19) amid speculation Britain's surprise decision to call a snap election could ultimately deliver a more market-friendly outcome in its divorce from the European Union.

The pound was lording it at US$1.2846 having shattered a months' old trading range with a jump of 2.2 per cent against the US dollar overnight, Reuters reported.

Against the Singapore dollar, the pound was 1.2 per cent higher at S$1.7918 at 9:20am, from its close on Tuesday at S$1.7703.

Border & Cie Singapore chief investment officer Bryan Goh told The Straits Times that investors, especially those in Asia, should not worry too much about the British election.

"Global growth is on the rebound from Japan to Europe. The US remains on a stable growth path and China is overheating a little," he said. "Keep some dry powder and hopefully political and policy uncertainty will shake the tree and investment opportunities will arise. Make sure you have some purchasing power."

Safe-havens stayed in favour as gold and bonds climbed ahead of presidential elections in France and on escalating tensions between the United States and North Korea.