Aug 28, 2019

Europe | Europe Markets Closing Report: Europe stocks close lower; sterling falls on no-deal Brexit fears; Thomas Cook tumbles 16%

Chloe Taylor, Elliot Smith

European stocks ended Wednesday’s session in negative territory after the U.S. yield curve inversion deepened to levels not seen since 2007, reigniting fears of an impending recession.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7114.7125.130.35669423128
The pan-European Stoxx 600 was 0.1% lower at the closing bell, insurance stocks shedding 1.2% while the oil and gas sector posted gains on the back of higher oil prices.
The inversion of the spread between the 10-year and 2-year U.S. Treasury yield continued to worsen on Wednesday after falling to its lowest level since before the financial crisis on Tuesday, with inversions of the yield curve consistently preceding periods of recession. The rate on the benchmark 30-year Treasury bond also hit a new all-time low.
Sterling fell around 0.4% against the dollar on Wednesday after the queen approved British Prime Minister Boris Johnson’s plan to suspend parliament. A statement from the Privy Council, a body of advisers to the queen, confirmed that parliament would be suspended on a day between September 9 and September 12, with the suspension lasting until October 14.
The highly-controversial move will restrict parliamentary time before the Brexit deadline and increase the chances of the U.K. leaving the EU with no deal. The fall in sterling boosted the FTSE 100, which was the only major bourse to end the session above the flatline.
Stateside, stocks traded higher on Wednesday, lifted by the energy sector which received a boost from the uplift in oil prices.
Back in Europe, German consumer sentiment data published Wednesday showed that consumer morale remained unexpectedly stable heading into September, despite the country’s deteriorating economic growth outlook.
Investor focus was also attuned to domestic politics in Italy as the Five Star Movement (M5S) and Democratic Party (PD) on Tuesday made progress toward a coalition deal.

Stocks on the move

Danish brewery Royal Unibrew jumped 10.8% to top the Stoxx 600, after posting higher-than-expected second-quarter profits and revising up its full-year guidance.
At the other end of the European blue chip index, Danish jeweler Pandora fell 6.9%, while London-listed John Wood Group shed 6.5%.
U.K.-listed airlines slid as no-deal Brexit fears intensified, led by easyJet, which dropped 2.7% by the closing bell.
Ailing British tourism group Thomas Cook saw its shares tumble 16.5% after agreeing a rescue package with China’s Fosun.

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