European stocks traded lower as UK prepares for Brexit showdown
European stocks traded lower Tuesday morning, with British opposition lawmakers bidding to seize control of the House of Commons and stop the U.K. leaving the European Union without a deal on October 31.
The pan-European Stoxx 600 slipped 0.4% in early deals, basic resources and retail stocks each shedding 1% to lead losses as all sectors traded in the red, while sterling’s weakness pushed the FTSE 100 to break trend and trade in positive territory.
Sterling broke below $1.20 on Tuesday morning amid Britain’s political uncertainty, sliding as low as $1.1967 to reach its lowest point against the greenback since the October 2016 flash crash.
Government officials on Monday said that U.K. Prime Minister Boris Johnson would call for a snap general election on October 14 if a cross-party group of MPs (Members of Parliament), including some rebels from within Johnson’s own ruling Conservative Party, succeed with a legislative bill to block a no-deal Brexit.
Johnson would need the backing of two-thirds of the U.K.’s 650 MPs to trigger an election in the fall. Main opposition Labour party leader Jeremy Corbyn said his party was ready for a general election, but one of his shadow ministers later said Labour would vote against plans to hold a general election before the departure date.
Stocks in Asia were subdued on Tuesday afternoon as trade tensions between Washington and Beijing continue to weigh, with China lodging a complaint against the U.S. at the World Trade Organization over import tariffs.
In corporate news, China has given Deutsche Bank and BNP Paribas “type A” licences allowing them to serve as a lead underwriter for corporate debt issued by non-financial institutions, an industry body under the central bank said on Tuesday.
China has faced pressure to ease its restrictions on foreign banks which have hindered business expansion, and been subject to calls to open its markets further amid an escalating trade war with the U.S.
On the data front, U.K. retail sales and construction PMI (Purchasing Managers’ Index) figures are due on Tuesday morning, along with euro zone producer prices.
No major losses were suffered in early trade, with a 2.7% dip for French telecoms operator Iliad leading losses after first-half results showed it had lost 127,000 subscribers as rivals gained market share.
Takeaway shares fell 2.5% after Just Eat shareholder Eminence Capital announced it would vote against the merger between the two food delivery services.
At the top of the Stoxx 600, Valmet shares rose 2.7% after the Finnish tech company received a new order in Germany.