U.S. Data released yesterday led to a relief rally in Asian bourses. Most of the indices rose higher, except Shanghai SE Composite Index and Nikkei 225 (INDEXNIKKEI:NI225). Service sector activity in U.S. rose in June due to higher new orders and employment. Supply Management’s nonmanufacturing purchasing manager’s index inched up to 56.5 in June from 52.9 in May.
The data calmed markets, which grew nervous over Brexit issues. HANG SENG (INDEXHANGSENG:HSI) added 1.03% to 20,706.92 during today’s session. European markets also registered steep gains after opening, driven by gains in consumer goods. Moreover, traders positively responded to Federal Reserve’s minutes of meeting from June, which sent out indications that rate hike will be kept on hold until Brexit vote and its consequences become clear. FTSE 100 (INDEXFTSE:UKX) rose 1.71% to 6,573.93 and CAC 40 (INDEXEURO:PX1) surged 1.63% to 4,151.91.
Sterling and oil gains momentum
Upbeat U.K. manufacturing and industrial production data kept Sterling off its record lows against the U.S. Dollar (CURRENCY:USD). However, analysts noted that uncertainty around Brexit vote would continue to impact Sterling’s trade. GBP/USD (GBPUSD) recouped 0.35% to 1.2975 during European hours. In other currencies, USD/JPY (USDJPY) extended losses by 0.38% to 100.94 and EUR/USD ( EURUSD) fell 0.15% to 1.1081.
A rally in iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL) prices also lent support to markets. Both Brent Crude and West Texas Intermediate added 1.27% each to trade near $49.42 and $48.03 respectively. Encouraging U.S. data supported demand for crude. However, oversupplies and Brexit will continue to influence oil prices in coming days. Improved service sector activity in U.S. erased worries about impact of Brexit on global economy, which favored oil trade. Moreover, traders are expecting fall in U.S. crude reserves in the previous week ahead of the government report.