Top Stories
Top Stories
Markets

European markets edge higher ahead of crucial Brexit vote; Italian banks struggle

Key Points
  • Market focus is largely attuned to an all-important vote on Prime Minister Theresa May's much-maligned Brexit deal on Tuesday.
  • Official data released Tuesday showed Europe's largest economy grew at its weakest rate in five years in 2018.
  • The euro hit a session low of 1.1408 against the dollar, its lowest level since Jan 7.

European stocks registered some late buying on Tuesday, as market participants braced for a showdown in Westminster over the U.K. government's Brexit plan.

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European Stoxx 600 finished up around 0.3 percent at the closing bell, with most sectors and all major bourses in positive territory.

Europe's health care sector led the gains, while autos was also higher amid news China is set to provide more supportive measures to stabilize its cooling economy. Fiat Chrysler and Ferrari were the top sectoral performers, with shares of both firms rising by around 2 percent.

Looking at individual stocks, Britain's Hays surged higher Tuesday after reporting an 8 percent increase in quarterly net fees. Shares of the staffing company were up around 4.4 percent higher on the news.

Meanwhile, Italian banks slumped toward the bottom of the index during Tuesday's trade. It came after reports suggested the European Central Bank could be set to ask Rome's notoriously fragile lenders to set aside further capital to deal with impaired loans. Italy's Ubi Banca and Banco BPM were the worst performers, with shares in both tumbling more than 4 percent.

Elsewhere, official data released showed Europe's largest economy grew at its weakest rate in five years in 2018. Economic output in Germany increased 1.5 percent last year, compared to 2.2 percent in 2017.

Ahead of an official estimate of fourth-quarter growth in February, Carsten Brzeski, chief economist at ING Germany, said: "It looks as if a technical recession could only just have been avoided."

"Needless to say that in the short run the biggest risk to this optimistic outlook is a disorderly Brexit which would come at the most inconvenient time for the German economy," Brzeski added in a research note published Tuesday.

Stateside, shares managed slim gains in Tuesday morning trade, with all major indexes in positive territory. The Nasdaq led the gains, rising by around 1.4 percent in by 11:30 a.m. Eastern Time.

Brexit in focus

Market focus is turning to an all-important vote on Prime Minister Theresa May's much-maligned Brexit deal on Tuesday.

Remarkably — and with less than 75 days to go before the country is set to leave the EU — May's template to withdraw from the bloc faces virtually certain defeat.

That leaves the prospect of a complete collapse of government, a disorderly exit from the bloc or even the entire Brexit process being scrapped altogether over the coming weeks.

Sterling was trading at around $1.2765 Tuesday afternoon. The U.K. currency has fallen by around 10 percent against the U.S. dollar since reaching a recent peak of $1.4335 in April 2018, in part due to rising fears over the course of the Brexit process.

In the early afternoon, the euro hit a low of 1.1408 against the dollar, its lowest level since Jan 7th when the euro traded as low as 1.1390 against the dollar.

190115 UK Sentiment Brexit