FTSE wobbles and European stocks sink as Brexit hangs in the balance

Oscar Williams-Grut and Tom Belger
Updated 2-min read
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Watch: Pound slides as UK warns Brexit talks could collapse

European stock markets slid on Monday, as investors’ hopes faded of a UK-EU trade deal to limit Brexit disruption at the end of the month.

UK sources are reported to have warned talks could collapse as early as Monday unless there is progress in another call between European Commission president Ursula von der Leyen and UK prime minister Boris Johnson scheduled on Monday.

Ireland’s foreign minister Simon Coveney has said the EU’s chief negotiator Michel Barner is “very gloomy” about the prospects of a breakthrough, with level playing field issues, governance rules and fishing still the long-standing stumbling blocks.

The FTSE 100 (^FTSE) wobbled in and out of the red in morning trading, and ended the day close to flat.

A fishing boat at work in the English Channel, off the southern coast of England, Saturday Feb. 1, 2020. The fishing industry if one of the main subjects for negotiations, after the UK left the European Union on Friday, ending 47 years of close and sometimes uncomfortable ties to Brussels. (Gareth Fuller/PA via AP)
A fishing boat at work in the English Channel, off the southern coast of England. Fishing remains a contentious issue in Brexit talks. Photo: Gareth Fuller/PA via AP

Britain’s 100 biggest listed companies outperformed continental rivals, however. Around 70% of FTSE 100 earnings are made in dollars, so a weak pound flatters sterling-denominated share prices.

The more domestically focused FTSE 250 (^FTMC) index fell 1.1%. On the continent, the DAX (^GDAXI) declined by 0.3% in Frankfurt and CAC 40 (^FCHI) dropped 0.8%.

Meanwhile the pound hit six-week lows against the dollar in early trade (GBPUSD=X), hit by negative headlines around Brexit. It was down 0.7% by the end of the trading day in Europe.

While the Guardian reported there had been a breakthrough on the key issue of fishing on Sunday, sources on both sides denied this was the case and some warned talks could break down altogether.

Britain’s Sunday papers were dominated by headlines saying the UK cabinet were prepared to support a potential no-deal outcome.

Economists at Barclays said “headline risks” were increasing as trade negotiations enter the final stretch.

READ MORE: Pound plunges as UK ‘threatens to pull out of Brexit talks’

Stocks were mixed as US markets opened. S&P 500 shares (^GSPC) were down 0.1% and the Dow (^DJI) dropped 0.5%, while the Nasdaq (^IXIC) gained 0.5%.

Equities had fallen in Asia overnight despite better-than-expected Chinese export data. Chinese exports rose 21% in November, compared to forecasts of a 12% rise.

Japan’s Nikkei (^N225) lost 0.8%, the Hong Kong Hang Seng (^HSI) fell 1.3%, and China’s Shanghai Composite (000001.SS) fell 0.8%. South Korea’s KOSPI (^KS11) bucked the trend, rising 0.5%.

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