SINGAPORE: Sterling slipped on Tuesday after a suspected suicide attack killed at least 19 people and wounded 59 at a pop concert in the English city of Manchester, while the euro held gains made after German Chancellor Angela Merkel said it was “too weak”.
Despite the explosion, at a concert by US singer Ariana Grande, European markets were poised for a positive start.
Financial spreadbetter CMC Markets expected Britain’s FTSE 100 to open up 0.1 per cent, and Germany’s DAX and France’s CAC 40 to start the day marginally higher.
The attack came just two-and-a-half weeks before an election that Prime Minister Theresa May is expected to win easily, although polls showing that the contest was tightening added to sterling’s woes.
Sterling eased almost 0.1 per cent to $1.299, recovering some earlier losses.
It fell 0.3 per cent on Monday.
The pound dropped 0.3 per cent to 144.27 yen, after losing 0.2 per cent on Monday.
If the blast is confirmed as a terrorist incident, it would be the deadliest attack in Britain by militants since four British Muslims killed 52 people in suicide bombings on London’s transport system in July 2005.
The impact on other areas of the market was limited, with Britain’s FTSE futures up 0.1 per cent, while S&P E-mini futures slipped 0.1 per cent.
“We could see a bout of nervousness re: the terror threat, but it’s likely to be minor,” said Shane Oliver, head of investment strategy at AMP Capital in Sydney. ‘‘Ever since 9/11, the impact on markets from terrorist events has been declining.”
The euro hit a six-month high overnight after Merkel said the currency, made “too weak” by the European Central Bank’s monetary policy, helped explain Germany’s relatively high trade surplus.
The common currency edged up almost 0.1 per cent to $1.1245 after jumping as much as 0.5 per cent and closing 0.3 per cent higher on Monday.
MSCI’s broadest index of Asia-Pacific shares outside Japan pared gains after hitting its highest level since June 2015 to trade fractionally higher.
Japan’s Nikkei slid 0.2 per cent.
Korean shares surged 0.8 per cent, remaining slightly below an all-time high hit earlier on Tuesday.
Chinese shares surrendered gains to drop 0.1 per cent on concerns over a regulatory crackdown on risky lending practices.
The Shanghai Composite lost 0.7 per cent.
Hong Kong’s Hang Seng rose 0.2 per cent after earlier rising to its highest level since July 2015.
Overnight, Wall Street closed as much as 0.8 per cent higher, driven by defence and technology stocks, after US President Donald Trump announced arms deals and other investments with Saudi Arabia over the weekend that Secretary of State Rex Tillerson said could add up to $350 billion.
An uncertain political climate in the US continued to weigh on the dollar, but a slowdown in Japanese manufacturing activity limited losses versus the yen.
The dollar was slightly lower at 111.20 yen. The dollar index, which tracks the greenback against a basket of trade-weighted peers, was 0.1 per cent lower at 96.894.
Losses were also kept in check by a gauge of US economic activity that improved in April to its highest level since late 2014.
The White House is set to deliver Trump’s first full budget to lawmakers later on Tuesday.
The plan would cut $3.6 trillion in government spending over 10 years, balancing the budget by the end of the decade.
Presidential budgets are often ignored by Congress, which controls federal purse strings.
But the budget plan, which proposed the sale of half the country’s strategic oil reserves, weighed on crude futures, offsetting optimism over expectations that other major oil producers would agree to extend supply curbs this week.— Reuters
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