2 Months : From Dec 2019 to Feb 2020
By Anna Hirtenstein
European stocks drifted down Monday after a top U.K. government official warned that the country would no longer be aligned with European Union rules and regulations after Brexit.
U.S. stock futures were largely flat, with markets scheduled to remain closed for Martin Luther King Jr. Day. Big technology stocks helped lead all three of the major U.S. indexes to a record close on Friday as the sealing of the U.S.-China trade deal, corporate earnings and economic data combined to fuel optimism about the economy.
The Stoxx Europe 600 index slid 0.1%, while the U.K.'s FTSE 100 gauge slipped about 0.4%. The pan-continental gauge ended last week at an all-time high.
In an interview with the Financial Times, the U.K.'s Chancellor of the Exchequer Sajid Javid urged businesses to prepare for a new operating environment as the country is unlikely to stay in lockstep with Brussels rules after the end of the year. His comments prompted concern among car makers and other manufacturers about the potential for new hurdles to exports when the transition period ends in December.
The pound slipped 0.1% against the dollar to trade at $1.3002.
"The Chancellor continues to firmly suggest there's been no headfake from them and there's an intention to allow the U.K. to diverge from EU rules and regulations and have less of a close trading relationship," said James Athey, a senior investment manager at Aberdeen Standard Investments. "That's negative news to some: we're seeing the sterling and European risk assets moving down a bit."
Among European equities, BAE Systems rose 3.1% after the U.K. defense-and-aerospace company said it would buy Collins Aerospace's military GPS business and Raytheon's radio division for about $2.2 billion to expand its electronics system operations.
Airline stocks slipped following the rise in oil prices. Air France-KLM was the biggest loser, declining 4.8%. International Consolidated Airlines Group, the parent of British Airways, the parent of British Airways, fell 1.5% and Deutsche Lufthansa retreated 1.6%.
In Asia, the Shanghai Composite Index closed 0.7% up after the People's Bank of China left its benchmark lending rates unchanged for the second straight month.
Oil prices rallied after a key export pipeline in western Libya was blocked, forcing additional production cuts a day after a port blockade had already halved the country's output. Brent crude, the global benchmark for oil, advanced as much at 1.3% to $65.72, the highest since mid-December, before trading up 1%.
Later in the day, European Central Bank President Christine Lagarde is scheduled to give a talk that may offer fresh insights into her thinking about monetary policy for the region.
Corrections & Amplifications
The International Monetary Fund's report on the global economic outlook will also be released from Davos, Switzerland. An earlier version of this article incorrectly stated the bank's name as the International Monetary Policy. (Jan. 20, 2020)
Write to Anna Hirtenstein at email@example.com
(END) Dow Jones Newswires
January 20, 2020 09:30 ET (14:30 GMT)
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