Asia report: Markets rise as Brexit fears ease

Markets in Asia closed higher on Monday as sterling gained strength, with Brexit concerns easing over the weekend with a number of polls showing renewed momentum for the Remain camp ahead of Thursday’s referendum.

In Japan, the Nikkei 225 closed up 2.34% at 15,965.30, with a relatively weaker yen releasing some of the pressure on stocks.

Investors also shrugged off news of an 11.3% drop in exports year-on-year in May, according to fresh trade data released before the open, against market expectations for a 10.4% annual drop.

The safe haven yen fell away against the greenback, and was last trading 0.26% weaker at JPY 104.43 per USD.

Major exporters were boosted by the weaker currency, with Nissan up 2.67%, Sony adding 3.05% and Toyota closing up 2.71%.

“The BoJ has been keeping its powder dry for the Brexit fallout,” said OANDA senior foreign exchange trader Stephen Innes.

On the mainland, the Shanghai Composite Index finished up 0.12% to 2,888.59, while the Shenzhen Composite added 0.44% at 1,909.12.

In South Korea the Kospi added 1.42% to 1,981.12, while Hong Kong’s Hang Seng Index finished ahead by 1.69% at 20.510.20.

Korean electronics mammoth Samsung announced during trading that power supply to its memory chip plant in China was disrupted on 18 June.

It explained that this affected a part of the production capacity at the facility, though it expected fewer than 10,000 chip wafers to be affected.

Investors brushed off the news, with the company closing up 0.35%.

India’s markets were mixed following the news that Reserve Bank of India governor Raghuram Rajan will leave his post at the end of his current term.

The Nifty 50 was up 0.86% at 8.240.30, while the SENSEX added 0.91% at 26,868.06.

On the currency front, the rupee fell against the dollar and was last trading 0.53% weaker at INR 67.4438 per USD.

Analysts pointed to easing Brexit concerns as being behind the return of risk appetite on Monday, though they did warn that markets remained volatile.

“With Brexit squarely in focus this week, markets have become hyper-sensitive to any new developments that might push the result one way or the other,” said Mizuho Bank foreign exchange strategist Wei Liang Chang.

Public opinion appeared to have swayed slightly back in favour of Remain over the weekend, with a YouGov poll for the Sunday Times giving it 44% of decided voters, against 43% for Leave.

The International Monetary Fund waded into the late stages of the debate on Friday, warning of “negative and substantial” net economic effects should the UK choose to leave the European Union.

Sterling strengthened as Brexit fears eased, with the pound last trading 1.85% stronger at $1.4624.

Oil prices were ahead during Asian trading, with Brent crude last up 1.34% at $49.84 per barrel and West Texas Intermediate adding 1.34% to $46.83.

In Australia, the S&P/ASX 200 finished 1.82% higher at 5,256.80, with the weighty financials subindex rising 2.32%.

Energy and materials were also key players during the session, finishing it up 5.39% and 2.33% respectively in their subindexes.

New Zealand’s S&P/NZX 50 added 0.3% to 6,869.53, led by transport giant Mainfreight which added 3.9%, bouncing back from a 3.6% hole on Friday.

Both of the down under dollars gained on the greenback, with the Aussie 0.81% stronger at AUD 1.3414 and the Kiwi adding 0.85% to NZD 1.4056 per USD.