European Markets Open Mixed in Reaction to New Concerns Over Brexit
European stocks are expected to open mixed Thursday, following the lead of Wall Street and Asia. The Fed minutes released late Wednesday are already history with European traders moving on to fresh news about Brexit.
According to pre-market reports, European traders are assessing the news that European Union leaders shelved plans for a special summit to complete a Brexit deal next month.
The early focus for traders on Thursday is expected to be the ongoing Brexit talks, as negotiations over Britain’s departure from the EU remain at an impasse. Despite the creeping pessimism, U.K. Prime Minister Theresa May remains confident that a deal could be completed in a timely manner, assuring EU leaders that both sides could still strike a deal.
EU leaders continue to be frustrated at the lack of progress in the negotiations. The main sticking point on Wednesday was that Britain failed to offer any new proposals to unlock the vexed Irish border question.
Asian stocks were mostly lower on Thursday with traders taking their cues from Wall Street, which also failed to produce gains. Investors were largely influenced by the Federal Reserve minutes which indicated the Fed will remain on its path toward more rate hikes. The markets have priced in a December 2018 rate hike, but they have yet to price in the possibility of three more rate hikes in 2019 as outlined in the September Fed monetary policy statement.
Stocks in Japan may have also been pressured by a report showing Japan’s exports fell in September for the first time since 2016 as shipments to the United States and China declined, adding to concerns about the broadening impact of an escalating Sino-U.S. trade war. Losses may have been limited by the possibility that shipments were impacted by natural disasters that may have caused a huge disruption on supply chain, industry production and transport in September.
The major U.S. stock indexes tumbled across the board on Wednesday in a volatile two-sided trade. Early in the session, prices were driven lower by a plunge in shares of IBM, which fell nearly 7 percent in the pre-market trade. Prices were further pressured by weaker-than-expected housing data.
The indexes recovered from earlier weakness shortly ahead of the release of the Fed minutes, but quickly turned lower when the summary of the central bank’s September meeting showed policymakers were leaning toward more rate hikes moving forward.