European Stocks Weaken on Increased Brexit Worries

European Stocks Weaken on Increased Brexit Worries

© Reuters.  © Reuters.

By Peter Nurse – European stock markets traded lower Monday, weighed by increased Brexit uncertainty and more coronavirus-inspired lockdowns ahead of key central bank meetings.

At 3:45 AM ET (0845 GMT), the DAX in Germany traded 0.8% lower, the CAC 40 in France fell 1.1% and the U.K.'s FTSE index dropped 0.3%.

The uncertainty surrounding Britain’s trading relationship with the EU in the new year is weighing on equity markets Monday, amid reports British Prime Minister Boris Johnson is set to pull out of talks within hours.

Johnson and European Commission President Ursula von der Leyden are scheduled to hold a call on Monday evening after negotiators were unable to solve differences over fishing rights, fair competition and ways to solve future disputes over the weekend.

Both the European and U.K. parliaments still need to ratify any accord, so time is running short for a deal to be implemented in time.

Also weighing, the southern German region of Bavaria announced on Sunday that it will impose a tougher lockdown from Wednesday until early January, meaning people will only be able to leave their homes if they have a good reason.

Germany's problems with the second wave of Covid-19 has undoubtedly contributed towards production expectations deteriorating for the coming months. Germany's Ifo institute said its index for production prospects dropped to 5.5 points in November from 16.3 points in October.

German industrial production rose 3.2% on the month in October, more than expected, but this could be a high point over the near term.

The European Central Bank and the U.S. Federal Reserve are both due to release policy decisions later in the week. The ECB is widely expected to increase its bond-buying program to aid the region’s economic recovery. Expectations of a U.S. stimulus package are also gathering pace after weak payrolls data last week, following months of deadlocked negotiations.

In corporate news, Italian fashion group Moncler (MI:MONC) stock rose 1.3% to a new all-time high after announcing the acquisition of smaller rival Stone Island for 1.15 billion euros ($1.4 billion)

In the U.K., retail group Frasers (LON:FRAS) stock fell 2.3% after it confirmed it was in rescue talks for Debenhams' U.K. operations. Countrywide (LON:CWD) stock soared over 18% after rival Connells increased its offer for the U.K. property group by 30% to 325 pence per share.

Oil prices weakened Monday on concerns the surge in coronavirus cases, mainly in Europe and the U.S., will result in more lockdowns, hitting demand for the product.

U.S. crude futures traded 1.4% lower at $45.61 a barrel, while the international benchmark Brent contract fell 1.2% to $48.65. Both benchmarks gained for a fifth consecutive week last week.

Elsewhere, gold futures fell 0.5% to $1,831.35/oz, while traded 0.1% lower at 1.2104.

Original Article

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