Yesterday, U.K.’s Prime Minister Boris Johnson made a comment which influenced the European stock markets. Johnson promised to block an extension of EU trade talks beyond 2020. His comment revived the fear of hard or “cliff-edge” Brexit.
Johnson’s party won a parliamentary majority. As a result, it will be very hard for his opponents to alter his plan.
Meanwhile, investor caution returned after his comment. European stocks were mixed on Wednesday morning. The Pan-European Stoxx 600 increased by 0.1% higher by late morning. Travel and leisure stocks fell by 0.4%. The oil and gas sector gained 0.5%.
The German DAX index declined by 0.25% or 32.89 points to 13254.94. Meanwhile, the French CAC 40 index added 1.08 points or 0.02% to 5969.53.
U.K.’s FTSE 100 added 6.72 points or 0.09% to 7531.91.
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Markets and global factors
Several factors impact stock markets around the world. One of the biggest challenges is the trade war between the U.S. and China.
On Tuesday, the media reported that U.S. President Donald Trump’s administration is finalizing a set of rules connected technology transfers. These rules will limit the export of sophisticated technology to China and other adversaries. However, the U.S. government may grant some exceptions to the tech companies.
Investors are waiting for the details regarding the “Phase one” trade deal. U.S. officials insisted that the deal is ready, and leaders will sign the agreement in January.
The German Ifo business climate survey released on Wednesday showed that business morale increased in December. According to this survey, the result surpassed the expectations. This is good news because it may indicate Europe’s largest economy would grow in the fourth quarter.
The shares of Swedish automaker Volvo rose 3.9% after the company announced a strategic alliance with Japanese company Isuzu Motors.
Trade deal with China, as well as the Brexit, created additional pressure on the stock markets. In this situation, it not surprising that investors are cautious due to risks connected with stocks.