EUROPE MARKETS: European Markets Struggle For Direction After May's Brexit Deal Defeat

By Emily Horton

European markets struggled for direction on Wednesday, as investors reacted to another Brexit defeat for U.K. Prime Minister Theresa May.

How did markets perform?

The Stoxx Europe 600 added 0.2% to 374.12, after finishing flat on Tuesday evening.

The U.K.'s FTSE 100 was also flat at 7,150.35, while Germany's DAX (DAX) hovered around 11,521.28.

France's CAC 40 was the region's top gainer, adding 0.4% to 5,289.69 and Italy's FTSE MIB index rose by 0.3% to 20,701.55.

The British pound jumped 0.7% to $1.3159 from $1.3073 late Tuesday evening in New York, reversing yesterday's losses, while the euro stayed close to $1.1295.

What's driving the markets?

On Tuesday evening, May's EU withdrawal deal was rejected by parliament for the second time (http://www.marketwatch.com/story/british-parliament-rejects-pm-mays-brexit-deal-for-second-time-by-margin-of-149-votes-2019-03-12), by 391 votes to 242.

"The government has wasted the last two years and this is mainly due to [May] because Theresa May knew that her own party isn't supporting her on this deal. Despite this, she tried to trick them with her set of tactics... we have lost Brexit now," Naeem Aslam, chief market analyst, ThinkMarkets said in a client note.

"So far the market has priced in a rejection of no deal Brexit. What isn't priced is how long the extension of the Brexit deadline will be, and most importantly, the difficulties involved in this process to secure such a deadline," he added.

Later today U.K. lawmakers will hold further Brexit votes. May has offered a vote on leaving the EU with no agreement in place; a concession to parliament's pro-Europeans, as MPs are widely expected to reject that notion with a large majority.

But president of the EU Council Donald Tusk reportedly (https://uk.reuters.com/article/uk-britain-eu-reaction-tusk/uk-parliaments-rejection-of-brexit-deal-raises-no-deal-risk-tusks-spokesman-idUKKBN1QT2QH) said on Tuesday evening that the chances of a no-deal Brexit had "significantly increased".

Against this backdrop, Wednesday's statement on the U.K.'s public finances from chancellor Philip Hammond is likely to be overshadowed.

"In the absence of a smooth transition at the end of this month any government forecasts for the U.K. economy are likely to be no more than educated guesses. The one plus point is that fiscal Phil has managed to build up a decent buffer due to better than expected tax receipts over the past 12 months." Michael Hewson, chief market analyst at CMC Markets U.K., told clients in a note.

What stocks are active?

Adidas PLC (ADS.XE) fell by 3% after the German sporting-goods company said it expects supply chain issues to hit sales growth in the first half of the year, Reuters reported (https://uk.reuters.com/article/uk-adidas-results/adidas-says-supply-chain-problems-to-rein-in-sales-growth-idUKKBN1QU0M9).

Meanwhile, Standard Life Aberdeen PLC (SLA.LN) added almost 3%, after the GBP552bn asset manager ditched its co-chief executive structure less than two years after it was put in place, giving Keith Skeoch sole oversight. However, the firm also reported a 1.5% fall in profits in 2018 (http://www.marketwatch.com/story/standard-life-aberdeen-profit-slips-2019-03-13).

(END) Dow Jones Newswires

March 13, 2019 07:58 ET (11:58 GMT)

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