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European stocks were cautious on Wednesday as investors remained concerned over a hard Brexit.
The Stoxx 600 SXXP, +0.09% edged 0.1% higher, sitting below the record highs of Monday, while the German DAX DAX, -0.25% nudged 0.2% lower. The FTSE 100 UKX, +0.12% and French CAC PX1, +0.05% also climbed 0.1% but the domestically-focused FTSE MCX, -0.64% fell 0.6% as the returning prospect of a no-deal Brexit spooked investors.
The pound GBPUSD, -0.3122% slipped further to $1.3104, having reached $1.35 after last week’s election.
What’s moving the markets?
After Boris Johnson’s convincing election victory last week, the Prime Minister moved on Tuesday to block any further delays to Brexit by introducing a law banning an extension beyond December 31, 2020. With just over a year to negotiate a U.K.-EU trade deal, concerns over a hard Brexit returned.
Wall Street climbed to record highs late on Tuesday on relief over the interim U.S.-China trade deal announced last week, but European gains were held back on Wednesday by renewed Brexit fears.
CMC Markets analyst Michael Hewson said: “As we head toward the middle of the last full trading week of 2019, investors appear to be adopting a much more safety-first approach, as the euphoria of a U.S.-China detente and a new Conservative majority government quickly fade.”
The closely-followed German Ifo survey showed the country’s business climate improved in December as German exporters were more positive amid easing U.S.-China trade tensions.
Which stocks are active?
Car manufacturers Fiat Chrysler FCA, +0.10% and Peugeot UG, +1.36% have reached an agreement over a $50 billion merger, the companies said on Wednesday. Each company’s shareholders will own 50% of the new entity. Peugeot’s stock rose 1.4% in early trading, while Fiat Chrysler remained flat.
Pearson PSON, +3.14% shares climbed 2.7% as the educational publisher said it would sell its remaining 25% stake in publisher Penguin Random House for $675 million. Chief Executive John Fallon will also retire in 2020, the company said.
U.K.-facing stocks tumbled on Wednesday, losing some of their gains after Johnson’s election win. The Conservative Party victory appeared to have ruled out a hard Brexit before the Prime Minister ramped up fears just days later. Royal Mail RMG, -3.79% fell 2.8%, house builder Persimmon PSN, -4.12% dropped 3.4% and challenger bank Virgin Money VMUK, -2.24% slipped 1.7%.
