Global Stocks Waver as Brexit, Growth Concerns Linger
March 13 2019 - 05:23AM
Dow Jones News
By Avantika Chilkoti
Global stocks wavered on Wednesday as concerns around global
growth weighed on investor sentiment and an impasse in the U.K. on
a Brexit deal rippled across the European market.
The Stoxx Europe 600 was up 0.1% in early morning trading. U.S.
futures pointed to opening losses of 0.5% for the Dow Jones
Industrial Average of and 0.1% for the S&P 500.
Asian stocks were mostly lower with the Shanghai Stock Exchange
down 1.1%, Hong Kong's Hang Seng Index dipping 0.4% and Japan's
Nikkei dropping 1%.
In Europe, investors were digesting news from London overnight,
where British lawmakers rejected a Brexit deal. Parliament is now
set to vote on Wednesday on whether a hard Brexit, where the
country barrels out of the EU without an agreement at the end of
the month, must be avoided.
The British pound was up 0.5% on the dollar and the euro
Wednesday, following a 1% drop on Tuesday after the U.K.'s attorney
general said Prime Minister Theresa May's revised Brexit deal
didn't eliminate the risk that the U.K. would be stuck in a customs
union with the bloc.
The U.K.'s FTSE 100 index, which is dominated by large
international businesses, as well as its FTSE 250 were both nearly
flat.
"The stakes are getting higher and higher, so any bit of good or
bad news is going to cause swings in the market," said Brian
Hilliard, chief U.K. economist at Société Générale.
For many investors the major concern is the political
uncertainty around a prolonged negotiation, which is weighing on
consumer sentiment and has businesses putting investment on
hold.
"A delay here is probably the worst thing that can happen
because it just increases the period of uncertainty," said Aaron
Anderson, senior vice president of research at Fisher Investments.
"Investors don't give the economy enough credit for being
adaptive."
Economists have flagged concerns that the impact of a hard
Brexit on the wider region have been underestimated, with the focus
on the economic fallout for the U.K. itself.
European investors have been on edge this week after European
Central Bank President Mario Draghi announced major cuts to growth
and inflation forecasts for the eurozone, following a slew of weak
economic data from the region and ongoing trade tensions that weigh
particularly on the region's open economy.
"The questions surrounding China, the strength of the economy,
the Chinese trade wars and Brexit all combined is particularly
sensitive for Europe," said David Slater, a portfolio manager at
Trium Capital, the London hedge fund.
The yield on 10-year German government bonds, also known as
bunds, rose to 0.062% on Wednesday, having edged toward negative
territory in recent sessions as the gloomy growth outlook in the
region pushed European investors toward safe haven assets.
Meanwhile, concerns around growth in the U.S. continued after
new inflation data published on Tuesday came in weaker than
expected, adding to disappointing payroll data last week.
"So many records being set with respect to our Economy [sic],"
President Trump said on Twitter, labeling the economic improvement
a "beautiful thing to watch."
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was broadly flat on Wednesday.
The 10-year U.S. Treasury edged up to 2.616%, from 2.605% on
Tuesday. Yields move inversely to prices.
Elsewhere in commodities, global benchmark Brent crude oil was
up 0.3% at $66.84 a barrel.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
March 13, 2019 05:08 ET (09:08 GMT)
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