Asia markets rise after record-breaking lead from Wall Street

Asian markets rose Tuesday following another record-breaking lead from Wall Street, with the China-US trade deal providing further support, though sterling took a battering as fresh fears of a no-deal Brexit emerged.

Christmas cheer continues to flow through trading floors after Friday's agreement between the world's top two economies ended months of wrangling and removed any immediate uncertainty.

The deal, which will see Washington wind back some tariffs and China ramp up purchases of US goods as well as change its trade practices, sparked a surge in equities that continued Monday in New York, with all three main indexes ending at all-time highs.

And, while Asia saw a slight wobble Monday, the optimism seeped into the region in early business, With Hong Kong rallying 0.6 per cent, Tokyo ending the morning 0.3 per cent higher and Shanghai rising 0.2 per cent.

Seoul jumped 0.7 per cent, while there were also gains for Sydney, Singapore, Taipei, Wellington and Jakarta.

But while the news has been met with broad relief, observers point out that the deal is only the first -- and easiest -- part of a wider agreement many think could take years to complete.

There are also concerns about the lack of detail and questions about how the two sides will implement the pact.

- 'Coal in the holiday stocking' -
On currency markets the pound took a hit from reports that Prime Minister Boris Johnson is planning to bring in a law making sure the next phase of Brexit is not extended beyond the end of 2020, reviving fears of a no-deal divorce.

While Johnson, fresh from a stunning election victory, will be able to push through his EU agreement before 31 January, he will then have to hammer out fresh trading terms.

But there is a fear that the 11-month timeframe he has set himself to complete that is nowhere near long enough, meaning Britain could completely break free without any kind of plan for trading with the bloc.

The reports sent sterling tumbling from $1.3422 to $1.3226 before edging back slightly. The pound had been sitting around 18-month highs in the wake of Johnson's stunning win, which ended years of political uncertainty.

"The honeymoon of the election is now over and the risks of a potential hard Brexit have been brought forward," Kyle Rodda, an analyst at IG Market, told Bloomberg News.

"Johnson is taking an assertive stance on Brexit and although a hard divorce may still be in the margins for now, there are increasing risk premiums priced into the pound."

And Stephen Innes at AxiTrader added that traders had "received the proverbial lump of coal in the holiday stocking".