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European markets close lower as Brexit and U.S. stimulus doubts weigh

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Key Points
  • U.K. leader Boris Johnson said there is a "strong possibility" of the U.K. departing the EU orbit without a free trade agreement.
  • Sterling fell 0.6% versus the dollar, trading at around $1.32.
  • Investors continue to monitor ailing negotiations over fiscal stimulus in the U.S.

LONDON — European markets closed lower Friday as investors monitored stalling U.S. fiscal stimulus talks and the rapidly approaching deadline for Brexit negotiations.

The pan-European Stoxx 600 provisionally closed down 0.7%, with telecoms shedding 2.9% to lead losses as almost all sectors and major bourses slid into negative territory.

British Prime Minister Boris Johnson said Thursday that there was now a "strong possibility" of the U.K. departing the EU orbit without a free trade agreement at the end of the month, with a deadline to extend talks falling on Sunday and the two sides remaining at odds on key issues.

European Commission President Ursula von der Leyen echoed Johnson's comments Friday, telling EU leaders there was a "higher probability for no deal than deal." Sterling fell 0.6% versus the dollar, trading at around $1.32.

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With the U.K. already beginning to deploy the Pfizer and BioNTech Covid-19 vaccine, advisors to the U.S. Food and Drug Administration (FDA) on Thursday endorsed the shot for emergency use stateside, where cases and deaths have continued to spiral.

European markets got a mixed handover from Asia-Pacific, where investors continue to monitor ailing negotiations over fiscal stimulus in the U.S. There was little sign of progress Thursday as lawmakers seek to pass a bill before essential financial lifelines to Americans expire at the end of the year.

Iron ore futures on China's Dalian Commodity Exchange surged by almost 10% on Friday to an all-time high, crossing the 1,000 yuan ($152.95) per ton mark for the first time in history on the back of a slew of supply concerns.

On Wall Street, the Dow Jones Industrial Average and S&P 500 fell on Friday, on pace for their first weekly loss in three weeks, as the outlook for additional fiscal stimulus remained uncertain.

Back in Europe, the EU will finally be able to proceed with its plan to raise 750 billion euros ($908 billion) from public markets to support the bloc's economic recovery efforts, on top of the 1.074 trillion euros ($1.3 trillion) to be spent between 2021 and 2027.

Hungary and Poland on Thursday dropped vetoes to a proposal linking the disbursement of funds with adherence to European values.

In terms of individual share price action, Hellofresh shares climbed over 6% after the meal kit delivery company set new mid-term targets, leading Kepler Chevreux to upgrade the stock from "hold" to "buy" and raise its target price.

At the bottom of the European blue chip index, Rolls-Royce shares fell almost 8% after the British airplane engine manufacturer downgraded its cash outflow forecast and warned of a challenging outlook.

Meanwhile, Swedish telecommunications giant Ericsson slipped 4% after filing a lawsuit in the U.S. against Samsung in a dispute over royalty payments and patent licenses, according to Reuters.