Europe Stocks Slip; Pound Drops on Brexit Report: Markets Wrap

European stocks edged lower with U.S. futures as investors mulled reports on a possible no-deal Brexit alongside President-elect Joe Biden’s undecided stance on lifting Chinese tariffs. The dollar turned higher.

Pro-cyclical sectors including autos and banks led declines on the Stoxx Europe 600 Index at the open. Britain’s pound reversed a gain after the European Union’s chief Brexit negotiator Michel Barnier reportedlytold EU ambassadors there may be no deal with the U.K.

Shares traded mixed in Asia, where China’s No. 2 smartphone maker Xiaomi Corp. dropped the most ever after disclosing a share sale. The offshore yuan erased gains after Biden told the New York Times he won’t immediately aremove tariffs on Chinese goods.

Gold held Tuesday’s advance while benchmark Treasury yields stayed above 0.9%.

After vaccine breakthroughs fueled record monthly gains for global stocks, markets appear to have priced in an improved health scenario, leaving investors looking for fresh catalysts to push equities higher. In the latest development, the U.K. became the first western country to approve a Covid-19 shot, with its regulatorclearing Pfizer Inc. and BioNTech SE’s vaccine. Nevertheless, the pandemic continues to gather strength across the U.S. and policy makers are warning about the economic implications.

“The question is how much is already priced in, and is the upside therefore limited?” Esty Dwek, head of global market strategy at Natixis Investment Managers Solutions, wrote in a report. “As we look to 2021, the outlook is one of improvement and leaving behind the chaos of the pandemic. Still, a number of risks remain.”

Congressional efforts to pass additional coronavirus relief in the U.S. crept ahead Tuesday as House Speaker Nancy Pelosi presented a fresh Democratic proposal and Senate Majority Leader Mitch McConnell floated a revision of his smaller plan to fellow Republicans.

Federal Reserve Chairman Jerome Powell cautioned lawmakers that the U.S. economy remains in a damaged and uncertain state during testimony at a Tuesday hearing before the Senate Banking Committee. In Australia, the central bank governor said a recovery is underway but remains patchy.

Elsewhere, crude oil nudged lower as tensions between OPEC members heightened uncertainty over the group delaying its planned output increase.

These are some key events coming up:

  • Fed’s Powell testifies before Congress again on Wednesday.
  • The U.S. employment report on Friday is expected to show more Americans headed back to work in November, though at a slower pace than October.

Here are some of the main moves in markets:


  • The Stoxx Europe 600 Index declined 0.3% as of 8:26 a.m. London time.
  • Nasdaq 100 Index futures were little changed.
  • Futures on the S&P 500 Index decreased 0.2%.
  • The MSCI Asia Pacific Index increased 0.2%.


  • The Bloomberg Dollar Spot Index climbed 0.1%.
  • The British pound decreased 0.4% to $1.337.
  • The Japanese yen weakened 0.2% to 104.57 per dollar.
  • The offshore yuan weakened 0.1% to 6.5596 per dollar.


  • Germany’s 10-year yield climbed less than one basis point to -0.53%.
  • Britain’s 10-year yield dipped one basis point to 0.341%.
  • France’s 10-year yield rose less than one basis point to -0.288%.
  • Japan’s 10-year yield gained one basis point to 0.026%.


  • West Texas Intermediate crude decreased 0.2% to $44.48 a barrel.
  • Gold was little changed at $1,814.96 an ounce.
  • LME zinc increased 0.2% to $2,775 per metric ton.
  • Iron ore surged 2.9% to $130.96 per metric ton.

— With assistance by Sophie Caronello, Joanna Ossinger, and Andreea Papuc

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