Asian Stocks Rise Amid Hopes Britain Will Stay in EU

Investors chat in front of an electronic board showing stock information at a brokerage house in Beijing, China, October 30, 2015. China stocks closed mixed on Friday as food and beverage shares gained on announced reforms to the country's one-child policy rule, but manufacturing lagged. REUTERS/Li Sanxian CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA (Newscom TagID: rtrlseven416944.jpg) [Photo via Newscom]
Investors chat in front of an electronic board showing stock information at a brokerage house in Beijing, China. (Reuters/Li Sanxian)

Asian stocks edged higher on Tuesday based on optimism that Britain will vote to stay in the European Union, but gains slowed as investors awaited an economic report by the head of the U.S. Federal Reserve.

The Shanghai Composite Index gained 0.5 percent to 2,903.67 and Tokyo’s Nikkei 225 advanced 0.4 percent to 16,027.92. Hong Kong’s Hang Seng gained 0.5 percent to 20,617.10 and Sydney’s S&P-ASX 200 added 0.3 percent to 5,274.30. Benchmarks in Taiwan, New Zealand and Indonesia gained, while Singapore retreated.

Global stocks gained as opinion polls and betting markets indicated Britons will vote to remain in the European Union in a referendum this Thursday. Many expect that a departure, known informally as Brexit, would hurt the British economy and possibly encourage other countries to leave. Uncertainty about the outcome has weighed on global markets. The vote is expected to be close.

Federal Reserve Chair Janet Yellen was due to give a semiannual report on the U.S. economy to the Senate. The Fed suggested in a statement after its latest policy meeting that it needs a clearer economic picture before resuming interest rate hikes it began in December. Some economists think a July increase is possible if the job market rebounds from a dismal May and financial markets remain calm after Britain’s EU vote.

“There has been little follow-through to the rapid recovery in sentiment witnessed during yesterday’s Asian trading session,” said Citigroup analysts in a report. With no major data due out in Asia, “investors will likely continue to focus on the calculus surrounding the U.K.’s EU referendum,” they said. “There will also be interest in tonight’s Congressional testimony by Fed Chair Yellen.”

U.S. stocks rose, based on optimism that British voters will choose to stay in the EU. The British pound rose sharply and investors dumped ultra-safe assets like U.S. government bonds, gold and utility stocks, sending those prices lower. Machinery and consumer companies jumped and energy companies rose with the price of oil. The Dow Jones industrial average rose 0.7 percent, the Standard & Poor’s 500 index advanced 0.6 percent and the Nasdaq composite gained 0.8 percent.

Benchmark U.S. crude shed 14 cents to $49.81 per barrel in electronic trading on the New York Mercantile Exchange. The contract soared $1.40 on Monday to close at $49.96. Brent crude, used to price international oils, fell 25 cents to $50.40 in London. It gained $1.48 on Monday to $50.65.

The dollar gained to 104.12 yen from Monday’s 103.85 yen. The euro edged up to $1.1337 from $1.1323.