Asia mixed as China’s industrial output growth slows and UK lawmakers reject a no-deal Brexit

  • Asia Pacific markets traded mixed on Thursday after data showed growth in China’s industrial output slowed and as British lawmakers overnight rejected the idea of leaving the European Union without a Brexit deal in place.
  • Data showed Thursday China’s industrial output growth fell to a 17-year low in the first two months of the year, according to Reuters.
  • Meanwhile, the British pound traded around $1.3265 at 11:02 a.m. HK/SIN after earlier surging around 2 percent against the greenback to $1.3339 — the biggest move since April 2017.

Asia Pacific markets traded mixed on Thursday after data showed growth in China’s industrial output fell. Overnight, British lawmakers rejected the idea of leaving the European Union without a Brexit deal in place.

The Nikkei 225 in Japan eased some of its gains to trade up 0.66 percent while the Topix index added 0.37 percent.

In South Korea, the Kospi gave up gains of near 0.4 percent in early trade to rise fractionally higher. Hong Kong’s Hang Seng Index added 0.11 percent.

Chinese mainland shares withdrew as the Shanghai composite fell 0.91 percent while the Shenzhen composite tumbled 2.39 percent.

Data on Thursday showed China’s industrial output growth fell to a 17-year low in the first two months of the year, according to Reuters. That further pointed to an economic slowdown in the world’s second-largest economy. But investments picked up pace as the government fast-tracked more road and rail projects, the news agency added.

Beijing has already pledged hundreds of billions of dollars in tax cuts and infrastructure spending to support the flagging economy.

The on-shore yuan traded at 6.7085 to the dollar after the People’s Bank of China set the day’s yuan midpoint at 6.7009. China’s central bank allows the currency exchange rate to rise or fall 2 percent from the midpoint rate.

Australia’s benchmark ASX 200 gave up most of its morning gains to trade flat.Brexit talks

Investors became optimistic when U.K. lawmakers rejected the idea of leaving the EU without a deal in place under any circumstance. Initially Prime Minister Theresa May’s government had asked Parliament to vote on ruling out a no-deal Brexit for the official Mar. 29 deadline.

The passing of the amended motion has severely undermined May’s authorityand could potentially lead to ministerial resignations, some analysts said.

The British pound traded around $1.3265 at 11:02 a.m. HK/SIN after earlier surging around 2 percent against the greenback to $1.3339 — the biggest move since April 2017.

Wednesday’s vote to reject a no-deal Brexit “does not remove the risk of a disorderly Brexit on March 29,” analysts at Singapore’s DBS Group wrote in a Thursday morning note. “The pound’s appreciation yesterday is still set on shaky and not on firm foundation.”

Members of the U.K. parliament will vote again Thursday evening to seek an extension to Article 50, which oversees the withdrawal process from the EU, thus extending the departure date beyond Mar. 29. The EU would have to agree to this and the U.K. would need to give a good reason for requesting such a delay.

Nomura’s Rob Subbaraman said in a note that Asia will “face serious contagion” effects of Brexit only in the unlikely event that the U.K. leaves the EU without a deal in place, which is known as a hard Brexit. He added that would likely drive the U.K. economy into recession and prompt a large depreciation of the pound.

Elsewhere, the dollar index, which measures the greenback against a basket of its peers, last traded at 96.595 against a basket of its peers, declining from levels above 97.000 earlier in the week. The Japanese yen, considered a safe haven currency, traded at 111.43 to the dollar.

Source: CNBC