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Lower US corporate profit–pattern triggers USD selling! (Thursday, October 24, 2019)

Asian shares pulled ahead on Thursday with corporate earnings buffeting trading as investors remained anxious about the business impact of the Sino-U.S. trade war while Brexit uncertainties kept overall sentiment in check.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2% with Japan's Nikkei up 0.5% at a one-year high. Australian shares climbed 0.5% while South Korea's KOSPI inched 0.4% higher. South Korea earlier reported third quarter growth slightly below expectations, though exports showed signs of recovery, while a private survey showed Japanese factory activity shrank at the fastest pace in over three years in October, hurt by slowing global demand and trade frictions.

On Wall Street overnight, the Dow and the Nasdaq added 0.2% each while the S&P 500 gained 0.3%. Telsa shares jumped 21% in after-hours trading following a surprise third quarter profit.  Microsoft also posted forecast beating profit and revenue numbers after the closing bell though the outlook was darkened by slower-than-expected take-up of its Azure cloud services. Earlier, shares of U.S. industrial bellwethers Boeing Co and Caterpillar Inc ended about 1% higher each despite big earnings misses.  So far, results from about 125 of the S&P500 companies are out with analysts expecting earnings to have declined 2.9% year-over-year. Risk appetite was also aided by a ceasefire in northern Syria which resulted in the lifting of U.S. sanctions against Turkey.

Later in the day, European and U.S. manufacturing numbers are due while the European Central Bank meets, with no change to policy expected at President Mario Draghi's last meeting. Draghi will be replaced by Christine Lagarde. Activity in the currency market was rather muted. Sterling paused at $1.2918 after rising 0.3% on Wednesday with Brexit developments in focus.

Britain appears closer than ever to resolving its 3-1/2-year Brexit conundrum but there are still hurdles to clear. EU member states on Wednesday delayed a decision on whether to grant Britain a three-month Brexit extension. Prime Minister Boris Johnson said if the deadline is deferred to the end of January, he would call an election. The UK government may not meet its current timetable of leaving the EU on 31 October, and an extension appears likely. In the meantime, Brexit uncertainty will keep weighing on UK business investment and activity.

The single currency was flat at $1.1135. The Japanese yen was a shade higher at 108.62 per dollar while the Australian dollar was barely changed at $0.6852. That left the dollar index mostly unchanged at 97.461 against a basket of six major currencies. In commodity markets, U.S. crude eased 30 cents to $55.67 while Brent slipped 28 cents to $60.89. Gold was treading water at $1,492.5 an ounce.