Europe midday: Investor sentiment dampened by Brexit uncertainty
By Alexander Bueso
Date: Thursday 21 Mar 2019
(Sharecast News) - Stocks on the Continent were trading mostly lower with the market spotlight firmly on the UK as investors gear up for what might be a wholly 'hard' exit of Britain from the European Union at the end of next week.
Nevertheless, a strong start to the trading day on Wall Street, after the Federal Reserve, America's central bank, surprised markets the night before by taking the possibility of further interest rate hikes off the table, was helping to steady sentiment.
So too a report that a US-China trade deal was very close.
Nevertheless, for some analysts it was the Fed decision which still mattered most, with Michael Hewson at CMC Markets UK highlighting to clients how the previous night's policy decision marked a 180 degree turnaround from what its stance had been at the start of 2019.
"It's not been a gradual change either, it's been more of the screeching hand brake turn variety than a slow about turn, where we've gone from the prospect of three rate rises this year, to no rate rises at all and the balance sheet run off to end by September, in the space of ten weeks," he told clients.
As of 1407 GMT, the benchmark Stoxx was dipping 0.17% to 380.17, alongside a 0.67% fall on the German Dax to 11,525.74, although the FTSE Mibtel was adding 0.24% to 21,380.64.
German stocks weren't the only casualty of the heightened uncertainty around Brexit, with the pound trading 0.23% lower to 1.1537, having earlier hit an intra-session low of 1.1509.
On Thursday, Confederation of British Industry director general, Carolyn Fairbairn, said the UK "was facing a national emergency" going as far as to say that the risk of a no deal had soared.
Following the Fed's greater than expected dovishness the night before, the yield on the benchmark 10-year German government bond was down by four basis points to 0.04% and that on similarly-dated Spanish debt by six basis points at 1.10%.
In turn, that was weighing on lenders' shares with the corresponding Stoxx 600 sector gauge down by 1.17% to 142.61.
The economic calendar was very light on Thursday, with only a reading on euro area confidence for the month of March set for release, at 1500 GMT.
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