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Asian markets slip as post-Brexit rally fades

Asian markets mostly fell Tuesday as a week-long rally finally came to an end with traders cashing in profits and awaiting developments in Britain`s preparation to leave the European Union after last month`s exit vote.


Asian markets slip as post-Brexit rally fades

Asian markets mostly fell Tuesday as a week-long rally finally came to an end with traders cashing in profits and awaiting developments in Britain`s preparation to leave the European Union after last month`s exit vote.

Shares worldwide have pushed higher since last week after a string of major central banks promised they would shore up financial markets to protect them against any negative effects from the British referendum result.

There were also hopes that the EU`s third biggest economy breaking away might not be as painful for the global economy as initially assumed.

However, analysts said that with so many uncertainties surrounding the future of the country, as well as ongoing weaknesses around the world, the rally had run out of steam.

"The market`s love affair with yield and all-things-not-Europe remains supportive," David Croy, a senior rates strategist in Wellington at ANZ Bank New Zealand, said.

"But it doesn`t alter the fact that caution on behalf of central banks, the forthcoming Brexit negotiations with the EU and the wave of elections in Europe next year have raised political risk in Europe."

Tokyo was 0.9 percent lower by the break, while Hong Kong also fell 0.9 percent and Seoul dipped 0.3 percent but Shanghai rose 0.5 percent.

Sydney sank one percent with Australia looking set for a hung parliament after weekend elections threw up no clear winner. Standard & Poor`s has warned the country`s top-notch AAA rating could be in danger if whoever wins office is prevented from continuing to improve budget balances.

Tuesday`s sell-off follows losses in European markets, where financial companies were hurt by a warning from the European Central Bank that Italy`s number-three lender Banca Monte dei Paschi di Siena, reported to be the world`s oldest bank, had dangerously high levels of bad debt.

The Italian banking system is emerging as a big worry for investors, compounding problems after Britain`s decision to leave the EU, with stress test results on the continent`s lenders due on July 29. Italy`s are expected to show capital shortfalls.

US markets were closed Monday for the Independence Day holiday.

 

From Zee News

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