In European Equity Markets stocks were mixed on Wednesday as investor caution returned following U.K. Prime Minister Boris Johnson’s vow to block an extension of EU trade talks beyond 2020, reviving fears of a “cliff-edge” Brexit. The pan-European Stoxx 600 inched hovered around the flatline, with food and beverage stocks gaining 1% while autos gave up 0.5%. Volvo shares climbed 3.3% after the Swedish automaker announced a strategic alliance with Japan’s Isuzu Motors, German takeout service Delivery Hero added 3.9%. Pearson shares added 2.3% after the company announced the sale of its remaining stake in Penguin Random House.
In Currency Markets sterling fell 0.2% on Wednesday as traders assessed the risk of a hard Brexit at the end of the year, with political news expected to take precedence over economic data. Prime Minister Boris Johnson’s government on Tuesday ruled out an extension to the December 2020 deadline for negotiations on a trade deal with the European Union, creating a new Brexit cliff-edge and cutting short sterling’s post-election rally. The pound fell on the news and has declined more than 3% from an 18-month high of $1.3516 struck after Johnson’s landslide victory in Thursday’s general election.
In Commodities Markets oil prices fell on Wednesday after U.S. industry data showed a surprise build up in crude inventories but losses were kept in check by expectations for an uptick in demand next year on the back of progress in resolving the U.S.-China trade row. Brent fell 35 cents, or 0.5%, to $65.75 a barrel on Wednesday. U.S. West Texas Intermediate (WTI) fell 48 cents, or 0.8%, to $60.46 per barrel. Prices had risen more than 1% in the previous session after the announcement last week of the so-called Phase One U.S.-China trade deal, which lifted global economic prospects and improved the outlook for energy demand.
In US Equity Markets rose slightly on Wednesday as Wall Street tried to extend its winning streak to six days. However, gains were kept in check as investors digested weak earnings from shipping giant FedEx. The S&P 500 and Nasdaq Composite both hit intra-day all-time highs, gaining 0.2% each. FedEx eyed its worst day since September after cutting its annual profit forecast for the second time this year. U.S. parcel delivery company fell 8% in premarket trading after it lowered its fiscal 2020 profit forecast on heavy expenses, slowing global trade and the fallout from its breakup with Amazon.com Inc.
In Bond Markets U.S. Treasury yields were steady on Wednesday as investors shrugged off the likely impeachment of U.S. President Donald Trump. The benchmark 10-year yield was up less than a basis point at 1.89% in trading on Wednesday morning. German business morale rose more than expected in December to hit a six-month high in a survey released on Wednesday, suggesting that Europe’s largest economy picked up steam in the fourth quarter despite a persistent manufacturing crisis. The two-year yield, which typically moves in step with interest rate expectations, was up less than a basis point at 1.63% in morning trading.