TOKYO: Asian stocks rebounded from a three-week low, the pound strengthened and oil snapped a six-day losing streak after the murder of a U.K. lawmaker prompted speculation Britons will be less inclined to vote to leave the European Union. Sovereign bonds fell as demand for haven assets ebbed.
Japan’s Topix index rebounded from a four-month low, tracking a rally in U.S. shares as the yen weakened for the first time in six days. The euro climbed with sterling after bookmakers’ odds indicated a reduced chance that the U.K. will leave the EU following a June 23 referendum. The currencies of commodity-exporting nations strengthened as U.S. crude snapped its longest selloff since February and copper led gains among industrial metals. Japan’s 10-year bonds declined for the first time in more than a week.
Anxiety stemming from a so-called Brexit curbed demand for riskier assets over the past week or so, wiping more than $2 trillion from the value of global stocks and sending bond yields to record lows in the U.K., Germany and Japan. Campaigning for the U.K. referendum was halted through Friday following the killing of Jo Cox, a member of Parliament who was a proponent of Britain remaining in the EU. Some traders noted that the equity rebound in the U.S. coincided with a pullback in odds of Britons electing to leave the EU, while others said a rebound was due after five days of losses.
“Campaigning has been placed on hold and that to an extent steadied the market,” said Tony Farnham, a strategist at Patersons Securities Ltd. in Sydney. “There’s a significant number of people still undecided and that’s really the swing factor.”
Concern over the U.K. vote was heightened over the past week by a slew of polls showing Britons favor leaving the EU, an outcome the “Remain” camp warns would be catastrophic for the country’s economy. Federal Reserve Chair Janet Yellen cited the referendum as a factor in the central bank’s decision to keep interest rates on hold Wednesday, while Switzerland’s central bank a day later warned Brexit could lead to turbulence in financial markets.
The MSCI Asia Pacific Index rose 0.8 percent as of 12 p.m. Tokyo time. Japan’s Topix climbed 1.4 percent, rebounding from a four-month low, as benchmarks advanced across the region.
“The dollar-yen market has calmed somewhat,” said Shunichi Otsuka, general manager of research and strategy at Ichiyoshi Securities Co. in Tokyo. “The fact that U.S. shares have risen is also a tailwind for Japanese equities.”
Futures on the S&P 500 Index rose 0.1 percent, following the benchmark’s 0.3 percent gain on Thursday. Data on Friday are forecast to show U.S. housing starts declined in May after surging a month earlier.
The yen slipped 0.3 percent to 104.58 per dollar, retreating from near its strongest level in almost two years. Finance Minister Taro Aso told reporters Friday that he was very concerned about one-sided, abrupt and speculative currency movements, speaking after the currency jumped 1.7 percent in the last session as the Bank of Japan refrained from expanding its record monetary stimulus.
“With Brexit risks an important driver of currencies in the near term, dollar-yen can track lower next week,” said Joseph Capurso, a senior currency strategist in Sydney at Commonwealth Bank of Australia. “That raises the risk the Ministry of Finance may intervene to stem the recent rapid gains in the yen.”
The pound strengthened 0.4 percent to $1.4257, after erasing a slump of more than 1.3 percent in the last session following Cox’s murder. Odds on the U.K. leaving the EU slid to 38 percent after hitting a record 44 percent on Thursday, according to Oddschecker calculations based on bookmakers’ quotes.
“The Brexit campaigning has been suspended, so perhaps that’s helping market sentiment,” said Roy Teo, senior currency strategist in Singapore at ABN Amro Bank NV.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, slipped 0.1 percent in a third day of losses as the currencies of Canada, South Africa, Australia and Norway climbed 0.4 percent or more, rallying with metals and crude.
West Texas Intermediate crude climbed 0.7 percent to $46.54 a barrel, paring its drop in the week to 5.2 percent, still its steepest loss in more than two months. There’s no need for Russia and Saudi Arabia to cooperate on influencing crude markets now and low prices may persist for 10 to 15 years, Russian Oil Minister Alexander Novak said in a Bloomberg television interview.
Copper climbed 0.9 percent in London, extending its weekly advance to 1.4 percent. Aluminum gained 0.5 percent and zinc rose 1.3 percent.
Gold for immediate delivery gained 0.2 percent, after falling on Thursday for the first time in seven days.
U.S. Treasuries due in a decade fell, lifting their yield by two basis points to 1.60 percent. Wednesday’s close of 1.57 percent was the lowest since 2012 and came after the Fed lowered its projection for interest-rate increases over the next two years.
“Our view is that the Fed will keep its policy rate as it is all this year and the next as well, meaning further declines in yields and an even flatter curve,” said Tomohisa Fujiki, the chief rate strategist at BNP Paribas SA in Tokyo. “Brexit is one of the risks, but the underlying problem is that global growth is not picking up.”
Japan’s 10-year bonds fell for the first time in seven days, lifting their yield by one basis point to minus 0.19 percent. It sank to a record minus 0.21 percent in the last session.