Asian markets mostly rose on Wednesday but investors appeared to take their foot off the pedal after the recent trade deal-fuelled rally, while sterling extended losses after Prime Minister Boris Johnson fanned fresh fears of a no-deal Brexit.

The region was given yet another strong lead from Wall Street, where all three main indexes clocked up more records following healthy US housing and industrial output data.

The mood across trading floors remains upbeat following last week’s long-awaited agreement that will see US tariffs lowered, and observers said that while details of the pact remain thin, the year looks set to end on a positive note.

The US data was encouraging as it was “very unclear that the improvement in trade sentiment – hence a better global outlook – is going to translate into real positive economic momentum immediately”, said Stephen Innes at AxiTrader.

“But it’s probably safe to say things shouldn’t get worse after the tariff rollback. And with the global data apparently bottoming, investors are playing from a much stronger hand than initially imagined.”

Hong Kong added 0.2 per cent, Sydney edged up 0.1 per cent, Mumbai gained 0.3 per cent and Taipei added 0.2 per cent. There were also gains in Bangkok, Manila, Jakarta and Wellington.

Tokyo ended down 0.6 per cent and Shanghai finished off 0.2 per cent while Seoul and Singapore were flat. The Cambodia Securities Exchange ended 0.36 per cent higher.

‘Well-earned rest’

“The price action suggests that the interim trade-deal induced rally may be taking a well-earned rest for now, after the impressive climb in stocks of the last few days,” said Oanda’s Jeffrey Halley.

Johnson’s decision to outlaw an extension to the Brexit transition past 2020 continues to drag on the pound, with the unit now down around three per cent from the recent peak it hit on Friday after his landslide election victory.

Sterling soared to multi-month highs in the wake of the win, fanned by relief at the end of years of political uncertainty in Westminster that meant the prime minister could push his Brexit agreement through parliament.

But Johnson’s decision will give him just 11 months to hammer out a full-blown trade pact with the European Union, which most commentators say is not enough.

Rodrigo Catril at National Australia Bank said the premier was in “a stronger negotiating position” but warned next year could be “a volatile one for the pound”.

“A hard Brexit cannot be ruled out, but the probability of a positive Brexit resolution has also increased,” he said.

“Note too that BoJo could still introduce a new bill for an extension in 2020 if he so wishes. After all not all Conservative [members of Parliament] support a hard Brexit.”

In early trade London and Paris were flat, while Frankfurt fell 0.3 per cent.