A Brexit delay seems in the bag — but until when? (Aris Oikonomou)

London (AFP) – Eurozone stock markets rose Wednesday ahead of a key EU summit, with the smart money on Britain winning a Brexit delay which analysts said would be welcomed by equity investors.

But there was some nervousness about a possible US-EU trade war after a tariff threat by Washington.

Meanwhile, the European Central Bank held key interest rates at historic lows at a regular policy meeting.

At a news conference, bank chief Mario Draghi warned of risks weighing on eurozone growth prospects but dismissed fears of a recession. He also said it was too early to take steps to help out banks whose profit margins have been squeezed by negative interest rates.

The euro traded lower against the dollar after Draghi’s remarks, with analysts saying his dim view of the eurozone economy weighed on the currency.

The next big item on the monetary policy agenda was Wednesday’s release of minutes from the US Federal Reserve’s latest meeting.

The London stock market lagged behind its eurozone peers at the close as the pound strengthened, eating into profits of London-listed multinationals with major earnings in other currencies.

Sterling benefited from the view that a Brexit delay would reduce the chances of a “hard” British exit from the European Union which would be expected to have dire economic consequences.

The currency shrugged off news that the UK economy grew by just 0.2 percent in February from a month earlier.

– ‘Anything but boring’ –

Analysts dubbed the combination of the EU summit, the ECB decision and the Fed minutes “Super Wednesday”, making for “anything but a boring day in the markets”, as Oanda analyst Craig Erlam put it.

“Today is the day we have all been waiting for; the reason why markets have been so subdued at the start of the week,” he said.

European leaders were gathering for a summit showdown to decide how long a Brexit delay to grant British Prime Minister Theresa May — and under what conditions.

Without a postponement, Britain is due to crash out of the European Union at midnight on Friday under a “no-deal” Brexit that could trigger economic chaos.  

May has embarked on a last-ditch battle to postpone Brexit from April 12 to June 30 to arrange an orderly departure — but European leaders are expected to offer her a longer delay, of up to a year.

May said Wednesday she wanted Britain to leave the EU “as soon as possible”.

“All eyes are on the EU27 meeting which has the potential to force the UK to choose between no-deal or no-Brexit,” said IG analyst Joshua Mahony.

“Meanwhile, US trade wars are back on the agenda,” he added.

European and US equities had fallen Tuesday amid a flare-up in trade tensions between Washington and Brussels.

– ‘Wrath of Trump’ –

US President Donald Trump has threatened to impose tariffs on more than $11 billion of European imports in retaliation over subsidies to aviation giant Airbus, jolting investors.

Airbus stock was down around 1.5 percent in late European trading on the first day under new chief executive Guillaume Faury.

The stock had already dived 1.86 percent lower on Tuesday.

The development stoked concerns about the White House’s hardline protectionist agenda that has taken aim at its biggest trading partners.

“Friend or foe, the latest headline suggests no country is exempt from the wrath of President Trump’s trade agenda,” warned Stephen Innes at SPI Asset Management.

Oil prices were higher after OPEC reported sharp declines in output by Venezuela and Saudi Arabia in March.

– Key figures around 1540 GMT –

London – FTSE 100: DOWN 0.1 percent at 7,421.91 points (close) 

Frankfurt – DAX 30: UP 0.5 percent at 11,905.91 (close)

Paris – CAC 40: UP 0.3 percent at 5,449.88 (close)

EURO STOXX 50: UP 0.2 percent at 3,424.65 

New York – Dow: DOWN 0.1 percent at 26,121.68

Pound/dollar: UP at $1.3082 from $1.3052 at 2100 GMT on Tuesday

Euro/pound: DOWN at 86.04 pence from 86.29 pence

Euro/dollar: DOWN at $1.1257 from $1.1263

Dollar/yen: DOWN at 110.91 yen from 111.14 yen

Tokyo – Nikkei 225: DOWN 0.5 percent at 21,687.57 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 30,119.56 (close)

Shanghai – Composite: UP 0.1 percent at 3,241.93 (close)

Oil – Brent Crude: UP 64 cents at $71.25 per barrel

Oil – West Texas Intermediate: UP 29 cents at $64.27

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.