GLOBAL MARKETS-Stocks and sterling hit by Brexit, U.S. stimulus doubts

  • 12/11/2020
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* Euro STOXX 600 slumps 1.3% * Bank stocks slip 2.6% to lowest in nearly 3 weeks * Sterling down 0.9% vs dollar to lowest in a month * Brexit uncertainties, U.S. stimulus timing dent sentiment * No-deal exit more likely than trade deal - von der Leyden * 2020 asset performance tmsnrt.rs/2yaDPgn LONDON, Dec 11 (Reuters) - World shares slipped and sterling skidded to its lowest in nearly a month on Friday as markets confronted the risk of Britain leaving the European Union without a trade deal, with doubts over U.S. stimulus also nagging. Europe’s broad Euro STOXX 600 shed 1.3%, with indexes in Paris and London slumping as much as 2.1% and 1.1% respectively. Banks were among the worst hit, sliding 2.6% to their lowest in nearly three weeks, with Spain’s lender-heavy main index down 2.3%. Britain is now more likely to leave the European Union’s orbit on Dec. 31 without a trade deal than with an agreement, European Commission President Ursula von der Leyden reportedly told the bloc’s 27 national leaders on Friday. The gloomy outlook echoed that of British Prime Minister Boris Johnson, who had said on Thursday there was “a strong possibility” Britain and the EU would fail to strike a trade deal. The MSCI world equity index, which tracks shares in 50 countries, turned negative and was last down 0.2%. Britain and the EU have set a deadline of Sunday to find an agreement, before Britain exits the bloc’s customs union and single market on Jan. 1. The odds of a disorderly Brexit rose to 61% on Friday from 53% a day before, according to the Smarkets exchange. Sterling fell 0.9% against the dollar, touching its lowest point since Nov. 16 and putting it on course to ending five straight weeks of gains. Volatility also rose to its highest in over eight months. “Investors are right to be worried,” said Olivier Marciot, a portfolio manager at Unigestion. “If there is no deal, there will be implications. There could be some sort of correction.” A no-deal Brexit would damage the economies of northern Europe, send shock waves through financial markets, block up borders and wreak chaos through the delicate supply chains which stretch across Europe and beyond. Morgan Stanley said it expects London’s FTSE 250 index to drop 6%-10% if London and Brussels fail to agree a trade deal, with insurance, real estate and housebuilding stocks also at risk. The Brexit jitters compounded uncertainty over prospects for a near-term U.S. fiscal stimulus. U.S. stocks had a mixed day on Thursday as Democrat House Speaker Nancy Pelosi suggested wrangling over a spending package and coronavirus aid could drag on through Christmas. Wall Street futures gauges fell 0.9%. Investors in Asia had earlier bet on stronger economic growth next year as more countries prepare for vaccinations. U.S. authorities voted overwhelmingly to endorse emergency use of Pfizer’s coronavirus vaccine while doses of a COVID-19 vaccine made by China’s Sinovac Biotech SVA.O are rolling off a Brazilian production line. But MSCI’s ex-Japan Asia-Pacific index turned negative as the mood soured, and was last down 0.2%. UPBEAT IPOs, DOWNBEAT JOBS Recent U.S. initial public offerings also suggested investors were generally upbeat on equities, even as job data pointed to weakness in the world’s biggest economy. Shares of Airbnb Inc more than doubled in their stock market debut on Thursday, valuing the home rental firm at just over $100 billion in the biggest U.S. initial public offering of 2020. DoorDash Inc stocks doubled in their first day of trading. At the same time, the number of Americans filing claims for unemployment benefits grew more than expected last week as mounting COVID-19 infections led to more business restrictions. The data “raises the prospect that the labour market progress seen in recent months is slowing significantly,” Deutsche Bank analysts wrote. The British pound traded at $1.3194, with its 1.5% loss so far this week versus the dollar setting it on course for a first weekly loss since late October. The dollar was up 0.3% against a basket of six major currencies, near lows not seen since spring 2018. The euro held not far from two-and-a-half-year highs of $1.2140 after the European Central Bank delivered a fresh stimulus package.

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