European Stocks Tick Lower on Fresh Strain to U.K. Ties
January 20 2020 - 12:47PM
Dow Jones News
By Anna Hirtenstein
European stocks drifted lower Monday, easing away from last
week's record, on concern that U.K. businesses may face fresh
hurdles for operations within the European Union if the British
government adopts a different set of regulations.
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 0.3%.
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.
The pound slipped 0.1% against the dollar to trade at
$1.2998.
"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 3.8% 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 a rise in oil prices. Air
France-KLM was the biggest loser, declining 4.6%. International
Consolidated Airlines Group, the parent of British Airways, fell
1.9% and Deutsche Lufthansa retreated 2%.
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 0.6%.
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.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
January 20, 2020 12:32 ET (17:32 GMT)
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