The pound is back under pressure after Brexit talks between Britain and European negotiators collapsed on the issue of Northern Ireland's border
London (AFP) - Europe’s major stock markets stumbled Tuesday as investors fretted over brewing Brexit uncertainty and a global technology selloff.
Approaching midday, the Frankfurt and Paris markets were each down 0.2 percent on tech sector woes, compared with Monday’s closing levels.
A weak pound, despite news of slowing growth in the UK services sector, helped London to climb 0.2 percent
Sterling remained under pressure one day after British and European negotiators failed to reach an agreement on Brexit.
A weak British unit boosts muilti-nationals that earn in currencies other than the pound.
“The FTSE 100 is in positive territory as the pound is being punished for the lack of political progress on the Brexit talks,” said David Madden, analyst at IG trading group.
“The British equity benchmark has a relatively high level of overseas exposure so the slide in sterling makes in more attractive to investors.”
The pound had initially rallied Monday on hopes that British Prime Minister Theresa May was close to a divorce deal with Brussels.
But talks collapsed after Arlene Foster, leader of the pro-British Democratic Unionist Party (DUP), objected to May’s position on the future of Northern Ireland’s border with eurozone member Ireland.
“It was no deal but a lot of excitement during yesterday’s European session, however ultimately it was disappointment yet again when it comes to Brexit, as optimism was quickly wiped out,” noted AxiTrader analyst James Hughes.
The DUP, which props up May’s minority government in London, told May in a phone call on Monday that they would not accept the agreement.
May is widely expected to return to Brussels on Wednesday or Thursday, with the EU warning that Sunday is the latest if she wants leaders to approve the opening of Brexit trade talks at a summit on December 14-15.
- Tech selloff -
In Asian trading Tuesday, a global tech selloff gathered pace with shares in giants Samsung and Tencent sliding sharply.
In New York on Monday, the Nasdaq tumbled more than one percent as dealers shifted out of the tech sector, which has enjoyed a healthy rally through the year, and into financial firms.
The Dow Jones Industrial Average however soared to yet another record closing high.
While investors welcomed news that the US Senate had finally passed controversial tax reforms, the deal must still be reconciled with a House bill.
“The high-tech sell-off has worsened overall sentiment,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities.
“Investors seem to be rebalancing (their portfolios) to take profits towards the end of the year, moving out of high-performing technology and health care issues into financial stocks that are likely to fare well next year,” Matsuno told AFP.
- Key figures around 1045 GMT -
London - FTSE 100: UP 0.2 percent at 7,355.43 points
Frankfurt - DAX 30: DOWN 0.2 percent at 13,036.74
Paris - CAC 40: DOWN 0.2 percent at 5,377.97
EURO STOXX 50: DOWN 0.2 percent at 3,570.38
Tokyo - Nikkei 225: DOWN 0.4 percent at 22,622.38 (close)
Hong Kong - Hang Seng: DOWN 1.0 percent at 28,842.80 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,303.68 (close)
New York - DOW: UP 0.2 percent at 24,290.05 (close)
Euro/dollar: DOWN at $1.1855 from $1.1865 at 2200 GMT
Pound/dollar: DOWN at $1.3424 from $1.3474
Dollar/yen: UP at 112.59 yen from 112.43 yen
Oil - Brent North Sea: DOWN 20 cents at $62.25 per barrel
Oil - West Texas Intermediate: DOWN 27 cents at $57.20