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  HOME | Business & Economy (Click here for more)

Global Stocks Waver as Brexit, Growth Concerns Linger

MADRID – Global stocks wavered on Wednesday as concerns around global growth weighed on investor sentiment and an impasse in the United Kingdom on a Brexit deal rippled across the European market.

The Stoxx Europe 600 was up 0.1 percent in early morning trading. United States futures pointed to opening losses of 0.5 percent for the Dow Jones Industrial Average of and 0.1 percent for the S&P 500.

Asian stocks were mostly lower with the Shanghai Stock Exchange down 1.1 percent, Hong Kong’s Hang Seng Index dipping 0.4 percent and Japan’s Nikkei dropping 1 percent.

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 percent on the dollar and the euro on Wednesday, following a 1 percent drop on Tuesday after the UK’s attorney general said Prime Minister Theresa May’s revised Brexit deal didn’t eliminate the risk that the UK would be stuck in a customs union with the bloc.

The UK’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 UK economist at Societe Generale.

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 UK 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 percent 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 US 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 US Treasury edged up to 2.616 percent, from 2.605 percent on Tuesday. Yields move inversely to prices.

Elsewhere in commodities, global benchmark Brent crude oil was up 0.3 percent at $66.84 a barrel.

 

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