Pound crashes in early Asian trading, unsettling markets
Posted October 6
HONG KONG — The pound plummeted to a fresh 31-year low Friday amid persistent concerns about Britain's exit from the European Union, unsettling stock markets in early Asian trading.
KEEPING SCORE: Japan's benchmark Nikkei 225 index lost 0.2 percent to 16,867.77 and South Korea's Kospi slipped 0.1 percent to 2,062.62. Hong Kong's Hang Seng shed 0.5 percent to 23,841.82 and Australia's S&P/ASX 200 fell 0.3 percent to 5,464.80. Benchmarks in Taiwan and Southeast Asia also lost ground. Markets in mainland China were closed for a weeklong holiday.
CURRENCY CHAOS: The pound tumbled sharply, slumping as much as 6 percent to its lowest in more than three decades, before rebounding somewhat, although the reasons for the "flash crash" were unclear. The British currency, which was trading at around $1.26 on Thursday, plunged past the $1.20 level early Friday before recovering minutes later and was recently trading around $1.24. Some market watchers blamed comments to British media by French President Francois Hollande, who insisted the European Union must take tough stance in negotiating Britain's exit from the bloc's tariff-free single market. Others cited a "fat finger" trading mistake. In other currencies, the dollar slipped to 103.69 yen from 103.96 yen and the euro eased to $1.1133 from $1.1139.
QUOTEWORTHY: Foreign exchange "traders will have woken up this morning stunned," said Margaret Yang of CMC Markets in Singapore. "The drop could be a fast 'snowball effect' triggered by panic selling and reinforced by stop loss orders and forced liquidation."
JOB REPORT: Investors are awaiting a U.S. report out later Friday that economists expect to show employers added a solid number of jobs in September while the unemployment rate stayed low. A strong result will boost the chances that Fed policymakers will soon move to raise short-term interest rates from ultralow levels that have supported a multiyear stock market boom.
WALL STREET: Major U.S. benchmarks ended with little change. The S&P 500 inched up less than 0.1 percent to 2,160.77. The Dow Jones industrial average fell less than 0.1 percent to 18,268.50. The Nasdaq composite slipped 0.2 percent to 5,306.85.
ENERGY: Oil hovered at a three-month high. U.S. benchmark crude oil futures dipped 2 cents to $50.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 61 cents to close at $50.44 a barrel on Thursday, its first close above $50 a barrel since June 23. Brent crude, the international standard, slipped 4 cents to $52.47 a barrel in London.