European Investors Cautiously Optimistic; BoE’s Carney Says He’ll Cut Rates if “No-Deal” Brexit

European shares are edging higher on Thursday as investors assessed mixed messages from the Trump administration ahead of the meeting between U.S. President Trump and Chinese President Xi Jinping on Saturday at the G-20 summit in Osaka, Japan. Investors were also digesting comments on Brexit from Boris Johnson, the favorite to succeed U.K. Prime Minister Theresa May, and Bank of England Governor Mark Carney.

Additionally, investors face a slew of economic reports early Thursday on Spanish consumer inflation, Italian business and consumer confidence figures, and German Preliminary CPI. Investors will also be closely watching the Italian 10-year Bond action.

At 07:53 GMT, the U.K.’s FTSE 100 is trading 7433.83, up 17.44 or +0.24%. Germany’s DAX is at 12317.82, up 72.50 or +0.59% and France’s CAC is trading 5507.61, up 6.89 or +0.13%.

According to CNBC, “the pan-European Stoxx 600 nudged 0.2% higher at the start of the morning session, basic resources and banks both jumping more than 1%, while the food and beverages sector lost 0.6% in early deals.”

BoE Governor Carney Talks “No Deal” Brexit Rate Cut

In the U.K., Boris Johnson said on Wednesday that the chances of Britain leaving the European Union without a deal are “a million-to-one” despite reiterating his promise to exit the bloc with or without a deal by October 31.

This statement may have prompted BoE Governor Carney to tell the U.K. Treasury Committee that the central bank would be more likely to cut interest rates in the event of a “no-deal” Brexit.

“It’s more likely we would provide some stimulus” in the event of no-deal Brexit, he told the MPs. “We have said we would do what we could in the event of a no-deal scenario but there is no guarantee on that.”

“Market expectations of a no deal have gone up in recent months. There has been a notable increase,” Carney said.

Carney also suggested the lack of clarity over Brexit was holding firms back from investing. “There is not a business investment boom going on in the country right now. I think we all know why that is the case.”

He went on to say, “The market assessment is it’s more likely there is some sort of path to some sort of deal than not. That could change. And asset prices would change accordingly.”

Asian Shares Boosted by Investor Optimism

The major Asian stock indexes finished higher on Thursday as investors held out hope for a trade deal between the United States and China. While most investors still feel that nothing major will come out of the meeting between Trump and Xi, optimism was raised early Wednesday after Treasury Secretary Steven Mnuchin told CNBC he thinks “there’s a path” for the U.S. and China to complete a trade deal.

Trump also said on Wednesday that a U.S.-China trade deal was possible, but noted he is “very happy with where we are now.”

The big question following the meeting on Saturday will be if or when Trump imposes an additional $300 billion in tariffs on almost everything China sells to the United States. That will be the measuring stick as to how successful the meeting was.