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Pound surges in Asia on referendum | |
(about 2 hours later) | |
The pound sterling has hit a two-year high against the euro and a two-week high against the US dollar, as Scotland voted against independence in a referendum. | |
In early Asian trade, sterling spiked to 78.12 pence per euro. | In early Asian trade, sterling spiked to 78.12 pence per euro. |
The pound also jumped nearly 0.8% to $1.6525 against the US dollar. The FTSE is also expected to open higher. | |
Over the past couple of weeks the pound had fallen on fears that Scotland would vote in favour of independence. | |
A vote to stay in the United Kingdom "would remove uncertainty over some very big issues", said Alan Ruskin, global head of G10 foreign-exchange strategy at Deutsche Bank. | A vote to stay in the United Kingdom "would remove uncertainty over some very big issues", said Alan Ruskin, global head of G10 foreign-exchange strategy at Deutsche Bank. |
Jeremy Cook, economist at World First said: "The obvious risk to the currency markets was a yes and that would have caused a big sell off. Now the markets will go back to concentrating on the fundamentals of the UK economy." | |
Shares prices in London are expected to open higher, in particular Scottish-related companies such as RBS, Lloyds Standard Life and Aberdeen Asset Management. | |
Brenda Kelly from IG Index said: "Investors in these firms will be relieved that management will be able to devote their time to business performance, rather than fretting about contract changes or headquarter moves." | |
"There is still uncertainty, primarily over the new changes to voting on English issues, but these are of importance primarily to politicians and less so to markets," she added. | |
Analysis: Kamal Ahmed, BBC business editor | |
With No confirmed as the winner in the referendum, we can expect the Royal Bank of Scotland to say there is now no need to move domicile to London. | |
The bank had prepared for a Yes vote by saying last week that it would move its headquarters from Edinburgh. | |
I wouldn't be surprised if Ross McEwan, the chief executive, re-iterated the bank's commitment to Scotland. I am sure RBS's executives are relieved that the upheaval of independence will now not happen. | |
Elsewhere in Asia, regional markets were mostly higher, taking their cues from Wall Street. | Elsewhere in Asia, regional markets were mostly higher, taking their cues from Wall Street. |
US stocks rose overnight, one day after the central bank - the US Federal Reserve - said it will keep its pledge to keep interest rates low. Those comments helped to lift the Dow Jones Industrial Average and the S&P 500 index to record highs. | US stocks rose overnight, one day after the central bank - the US Federal Reserve - said it will keep its pledge to keep interest rates low. Those comments helped to lift the Dow Jones Industrial Average and the S&P 500 index to record highs. |
Markets in Japan, Australia and Taiwan are all trading in the positive column. Japan's benchmark Nikkei index is up by 1.5%. Gains are also driven by yen weakness, which has prompted investors to buy up shares of export companies. | Markets in Japan, Australia and Taiwan are all trading in the positive column. Japan's benchmark Nikkei index is up by 1.5%. Gains are also driven by yen weakness, which has prompted investors to buy up shares of export companies. |
Alibaba IPO | Alibaba IPO |
Away from Scotland, eyes are also on the world's biggest initial public offering (IPO) due to take place later today. That is when Chinese e-commerce juggernaut Alibaba will float its shares on the New York Stock Exchange. | Away from Scotland, eyes are also on the world's biggest initial public offering (IPO) due to take place later today. That is when Chinese e-commerce juggernaut Alibaba will float its shares on the New York Stock Exchange. |
Shares in Alibaba have been priced at $68 (£42), the top end of the range and the IPO will raise $21.8bn, making it one of the largest flotations ever. | Shares in Alibaba have been priced at $68 (£42), the top end of the range and the IPO will raise $21.8bn, making it one of the largest flotations ever. |
It values Alibaba, which accounts for 80% of all online retail sales in China, at $167.6bn. | It values Alibaba, which accounts for 80% of all online retail sales in China, at $167.6bn. |
That value surpasses such corporate titans as Walt Disney and Boeing. | That value surpasses such corporate titans as Walt Disney and Boeing. |
The final amount raised from the sale could change, depending on the final allotment allocation. | The final amount raised from the sale could change, depending on the final allotment allocation. |
If underwriters exercise an option to sell more shares, the money raised could increase to $25bn, beating the record listing held by Agricultural Bank of China. That flotation in 2010 raised $22bn. | If underwriters exercise an option to sell more shares, the money raised could increase to $25bn, beating the record listing held by Agricultural Bank of China. That flotation in 2010 raised $22bn. |