Tokyo’s Nikkei up, pound down with eyes on British election

AFP: Tokyo’s benchmark stock index opened higher yesterday after ousted FBI chief James Comey’s explosive testimony, while the pound took a hit as British election exit polls pointed to a hung parliament.
The Nikkei 225’s modest rise tracked Wall Street which edged up after Comey’s testimony on his firing by President Donald Trump and links to the investigation into Russian meddling in the 2016 US election.
Comey testified that Trump asked him for ‘loyalty’ and to drop a criminal investigation into his former National Security Advisor Mike Flynn.
Although the testimony painted an unflattering picture of Trump, analysts said most of the information had already been aired in press reports and the disclosures themselves were not disturbing enough to hurt deflate market sentiment.
“The testimony ended without a fresh storm of controversy,” said Toshikazu Horiuchi, a broker at Tokyo’s IwaiCosmo Securities.
“It does not mean an end to the scandal but the case has turned an important corner,” Horiuchi told AFP.
The Nikkei rose 0.18 percent, or 36.54 points, to 19,945.80 in early trade, while the broader Topix index of all first-section issues slipped 0.08 percent, or 1.25 points, to 1,589.16.
The British pound fell sharply as an exit poll following the general elections suggested Prime Minister Theresa May’s Conservative Party could lose its parliamentary majority, as the country begins sensitive Brexit negotiations.
Sterling plunged to a low of US$1.2709 late Thursday in New York, down nearly two percent from levels seen before the exit polls.
In Asian trade the pound changed hands at US$1.2730.
A hung parliament could make negotiating Britain’s exit from the European Union more complicated.
“We expect that political haggling would get messier than before,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities, referring to the possibility of a hung parliament.
“This is a negative and will impact the pound and FTSE 100.”
Still, he added that Tokyo investors were now shifting their focus to the Federal Reserve’s policy-setting Federal Open Market Committee next week.
Some companies with significant business in Britain lost ground. Automaker Nissan fell 0.32 percent to 1,072.5 yen while Hitachi was down 0.41 percent at 676.5 yen.
Sony declined 0.31 percent to 4,103 yen and Toyota slipped 0.13 percent to 5,798 yen.
SoftBank jumped 5.80 percent to 9,333 yen, after the telecoms giant said it will buy robot maker Boston Dynamics from Google parent Alphabet. Financial terms of the deal were not disclosed.
Uniqlo operator Fast Retailing, a market heavyweight, rose 1.09 percent to 37,700 yen.