© Reuters. Passers-by in protective masks walk past a screen displaying Nikkei stock average and global stock indices amid the coronavirus disease (COVID-19) outbreak in Tokyo
By Tom Wilson
LONDON (Reuters) – Global stocks fell and the British pound fell to its lowest level in nearly a month on Friday, as markets faced the risk of Britain exiting the European Union without a trade deal, and doubts on the American stimulus are also annoying.
The euro overall fell 1.3%, and the Paris and London indices fell as much as 2.1% and 1.1%, respectively.
Banks were among the hardest hit, falling 2.6% to its lowest level in nearly three weeks, while Spain’s leading index of lenders fell 2.3%.
Britain is now more likely to leave the orbit of the European Union on December 31 without a trade deal than with a deal, reportedly, European Commission President Ursula von der Leyden told the 27 leaders on Friday. nationals of the block.
The bleak outlook echoed that of British Prime Minister Boris Johnson, who had said Thursday that there was “a strong possibility” that Britain and the EU would fail to reach a trade deal.
The MSCI World Stock Index, which tracks stocks in 50 countries, turned negative, down 0.2%.
Britain and the EU set a deadline on Sunday to reach an agreement, before Britain exits the bloc’s customs union and single market on January 1. The odds of a disorderly Brexit rose to 61% on Friday from 53% the day before, according to the Smarkets exchange.
The British pound fell 0.9% against the dollar, hitting its lowest point since Nov. 16 and heading to end five consecutive weeks of gains. Volatility also reached its highest level in more than eight months.
“Investors are right to be concerned,” said Olivier Marciot, portfolio manager at Unigestion. “If there is no agreement, there will be implications. There could be some kind of correction.”
A no-deal Brexit would damage northern European economies, generate shock waves in financial markets, block borders, and wreak havoc on delicate supply chains that stretch across Europe and beyond.
Morgan stanley (NYSE 🙂 said it expects London’s to drop 6-10% if London and Brussels don’t reach a trade deal, and insurance, real estate and homebuilding stocks are also at risk.
Brexit nervousness added to uncertainty about the prospects for a short-term US fiscal stimulus.
U.S. stocks had a mixed day on Thursday, as Democratic House Speaker Nancy Pelosi suggested the dispute over a spending package and coronavirus aid could drag on until Christmas.
Wall Street futures indicators fell 0.9%.
Investors in Asia had previously bet on stronger economic growth next year as more countries prepare for vaccines.
The US authorities voted overwhelmingly in favor of the emergency use of Pfizer (NYSE :), while the doses of a COVID-19 vaccine manufactured by the Chinese Sinovac Biotech SVA.O come off a Brazilian production line.
But the MSCI Asia-Pacific index, excluding Japan, turned negative as sentiment soured, ultimately falling 0.2%.
OPI IMPROVEMENTS, JOBS DOWNBEAT
Recent US initial public offerings also suggested investors were generally bullish on the stock, even as labor data pointed to weakness in the world’s largest economy.
Shares of Airbnb Inc more than doubled in its trading debut Thursday, valuing the home rental company at just over $ 100 billion in the largest initial public offering in the United States of 2020. Shares of DoorDash Inc were they doubled on their first trading day.
At the same time, the number of Americans filing for unemployment benefits grew more than expected last week, as the rise in COVID-19 infections led to further trade restrictions.
The data “raises the prospect that the labor market progress observed in recent months is slowing significantly,” German bank (DE 🙂 the analysts wrote.
The British pound was trading at $ 1.3194, with its loss of 1.5% so far this week against the dollar, putting it on track for a first weekly loss since late October.
The dollar was up 0.3% against a basket of six major currencies, close to lows not seen since spring 2018.
The euro remained near a two-and-a-half-year high of $ 1.2140 after the European Central Bank delivered a new stimulus package.