Asian equities started the December quarter on a positive note, latching on to a positive lead from Wall Street where concerns about Deutsche Bank eased slightly.
The British pound was also garnering some attention after Theresa May, UK prime minister, said over the weekend that Britain would trigger by March next year the proceedings that would formally commence its exit from the EU.
Japanese stocks were putting in a solid performance and the yen was weaker after the Bank of Japan’s closely-watched Tankan survey showed conditions for businesses were still soft and expected to deteriorate further in coming months.
The broad Topix benchmark was up 1 per cent while the price-focused Nikkei 225 gained 1.1 per cent. The yen was 0.1 per cent weaker at ¥101.45 per dollar.
The Tankan survey showed conditions for large manufacturers were steady in the September quarter at an index reading of 6, and were expected to stay flat in the December quarter. Conditions for large non-manufacturers eased to 18 from 19 in the June quarter, and the index is expected to decline two index points over the next three months.
Generally, conditions at medium- and small-sized manufacturers and non-manufacturers improved in the September quarter, but even they expect softer conditions over the coming three months.
One factor likely to keep pressure on businesses is the stronger yen. Companies now forecast the currency to average ¥107.92 per dollar in 2016, compared to a forecast in June of ¥111.41. Today, the yen was on track for its fifth-straight day of weakening against the greenback, but that was from a one-month high of almost ¥100 last week.
Australia’s S&P/ASX 200 was up 0.8 per cent, while Hong Kong’s Hang Seng rose 1.3 per cent. China’s markets are closed all this week for a string of public holidays.
In foreign exchange markets, sterling was the worst performer among major currencies, down 0.3 per cent at $1.2933, the lowest level in a month-and-a-half. Over the weekend, Theresa May said Article 50, the official legal notification to its EU partners it is going to leave the bloc, would be triggered “no later than the end of March”. That sets the UK up to leave the EU by 2019.
The euro was flat on Monday at $1.1231. The dollar index, a measure of the US currency against a basket of global peers, was up 0.1 per cent at 95.557 today.
Gold was marginally higher at $1,316.23 an ounce, eyeing its first gain in five sessions.
Oil prices were weaker in Asia, letting off some steam after news last week that Opec had agreed to its first production cut since 2008 in an effort to rebalance global supply. Brent crude, the international benchmark, was down 0.5 per cent at $49.94 a barrel, while West Texas Intermediate slipped 0.6 per cent to $47.96.
On Friday, the S&P 500 climbed 0.8 per cent, buoyed by reports Deutsche Bank may face a smaller fine from the US Department of Justice than the $14bn settlement originally flagged. That initial estimate triggered market-wide concerns last week over the health of the lender.