Asia trades higher following strong US earnings and after UK government wins no-confidence vote

FAN Editor

Asia Pacific markets rose in early trade on Thursday with investor sentiment likely buoyed by strong quarterly earnings in the U.S. and after the U.K. government won a parliamentary confidence vote.

Japan’s Nikkei 225 jumped 0.26 percent in early trade while the Topix index added 0.53 percent. The yen, considered a safe-haven asset, retreated against the dollar, trading at 109.00 at 8:08 a.m. HK/SIN compared to levels near 108.00 earlier in the week.

In South Korea, the Kospi gained 0.23 percent.

Australia’s benchmark ASX 200 rose around 0.2 percent after the first hour of trade as the heavily-weighted financial subindex gained 0.4 percent.

The U.K. government led by Prime Minister Theresa May surviveda vote of no-confidence on Wednesday. It took place one day after May’s plan on how Britain should exit the European Union was overwhelmingly voted down in the House of Commons.

The British pound traded at $1.2882 Thursday morning during Asian hours, reacting fractionally to the outcome of the no-confidence vote.

May faces the task of cobbling together a Brexit deal that will satisfy both lawmakers in Europe and the U.K. as well as delivering on the 2016 referendum result. But some have suggested that a second referendum vote on the decision to leave the European Union could likely happen.

“If a second referendum is called, we believe (the pound) will begin to appreciate because the YouGov polls indicate a majority of those surveyed leaning towards remaining in the EU,” Richard Grace, chief currency strategist and head of international economics at the Commonwealth Bank of Australia, wrote in a morning note. “While this was the case in mid 2016 ahead of the initial referendum, there is now a better understanding by the public of the ramifications of each of the options.”

Overnight on Wall Street, stocks rose as investors cheered strong quarterly earnings from major banks like Goldman Sachs and Bank of America. In its latest report on the economy, the U.S. Federal Reserve said on Wednesday that labor markets have tightened across the country as businesses struggled to find workers at any skill level while wages grew moderately.

The dollar index, which measures the greenback against a basket of its peers, changed hands at 96.075 at 7:36 a.m. HK/SIN. Meanwhile the Australian dollar traded at $0.7166 and the euro was at $1.1395.

— CNBC’s David Reid contributed to this report.

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