Pound sinks amid 'Brexit' showdown as Asian shares edge ahead with oil, STI up 0.3%

A pedestrian looks at an electric quotation board showing share price indexes of the Tokyo Stock Exchange on Feb 22, 2016.
A pedestrian looks at an electric quotation board showing share price indexes of the Tokyo Stock Exchange on Feb 22, 2016. PHOTO: AFP

SYDNEY (REUTERS) - Asian share markets edged cautiously higher on Monday (Feb 22) as investors awaited a rush of February industry surveys to take the pulse of the global economy, while the pound suffered on concerns the UK might yet vote to leave the European Union.

A busy week for data culminates with a Group of 20 meeting that offers leaders a chance to soothe market concerns with talk of coordination, even if it produces nothing concrete.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.7 per cent, having rebounded more than 4 per cent last week.

The calmer mood was aided by oil as Brent crude added 31 cents to US$33.32 and US crude rose 26 cents to US$29.90.

Japan's Nikkei recouped early losses to rise 0.7 per cent, buoyed by a retreat in the yen even as an activity survey showed a drop in new export orders took a heavy toll on manufacturing.

The Markit/Nikkei Flash Japan PMI fell to 50.2 in February, from 52.3 in January, a potentially bleak omen for the rest of the region.

China's major stock indexes firmed as investors welcomed news over the weekend that the head securities regulator was being replaced. The blue-chip CSI300 index and the Shanghai Composite Index both rose 0.9 per cent.

Singapore's Straits Times Index was up 0.27 per cent at 2,664.02 as of 11 am.

E-Mini futures for the S&P 500 were also up 0.3 per cent.

While Wall Street ended Friday with a whimper, the major indexes still boasted their best weekly performances this year, with the Nasdaq tallying its strongest week since July.

"Equity markets successfully stress-tested and bounced from key technical support last week," wrote analysts at RBC Capital Markets. "While we cannot definitively say the cycle/2016 lows are in place yet, the technical evidence continues to suggest a more durable bottom may be forming."

The early price activity was in sterling, which beat a hasty retreat as worries that Britain may quit the European Union flared up after London Mayor Boris Johnson threw his weight behind the exit campaign.

The pound fell around 1 per cent on the greenback, euro and yen. It slid as far as US$1.4235 and 160.07 yen, from around US$1.4405 and 162.10 late on Friday.

Sterling has just about completely reversed gains made on Friday after EU leaders agreed unanimously on a package of measures aimed at keeping Britain in the 28-nation bloc to avoid a potentially disastrous divorce.

The other major currencies were steadier. The US dollar was a touch firmer at 112.89 yen, as was the euro at 125.45 . Against the greenback, the common currency was also slightly weaker at US$1.1116.

The dollar was underpinned by data last Friday that showed underlying US consumer price inflation accelerated in January by the most in nearly 4-1/2 years.

The figures should support the view that the Fed could gradually raise interest rates this year as forecast, though markets remained highly sceptical given the backdrop of slowing global growth and market turbulence.

Finance ministers and central bank governors from the Group of 20 rich nations gather in Shanghai this week to discuss those global headwinds.

There has been some chatter about a possible grand currency agreement that would allow for a depreciation in the U.S. dollar, which might relieve pressure on commodity prices and on emerging markets.

However, most analysts consider it very unlikely given so many of the G20 central banks are actively easing policy and need their own currencies to stay competitive.