By Callum Keown
European stocks edged lower on Tuesday as Brexit uncertainty swept across the continent ahead of a crunch day for British MPs.
The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.66% fell 0.4% ahead of the British Parliament’s Brexit showdown later in the day.
The internationally focused FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.29% avoided the heavier losses, sliding just 0.1%, as sterling /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.1946% dropped below $1.20 to its lowest level since October 2016.
What’s moving the markets?
Brexit concerns have intensified, weighing on European stocks as the U.K. Parliament prepares for a crucial few days.
British Prime Minister Boris Johnson has threatened a snap election if a group of rebel MPs succeed in blocking a no-deal exit from the European Union through a bill being put forward on Tuesday.
The heightened uncertainty caused stocks to open lower and the prospect of an election led the pound to slide 0.7% to $1.1984.
Investors turned away from risky assets in favor of havens, as the yields on Italian and German 10-year bonds hit record lows.
Russ Mould, investment director at AJ Bell, said: “The market hates uncertainty and that extends to politics.
“The current chaos around the U.K. exiting the EU threatens to push down sterling even further unless we get a clear idea of what is happening and when.”
Positivity over a potential resolution to the U.S.-China trade war was tempered by reports that Beijing’s request to delay tariffs has been denied and that negotiators are struggling to schedule dates for a meeting this month.
Which stocks are active?
Travel and leisure stocks were hit on Tuesday as budget airline EasyJet /zigman2/quotes/202825892/delayed UK:EZJ +4.64% fell 4.5% after being downgraded by Kepler Cheuvreux from hold to reduce.
The Restaurant Group /zigman2/quotes/207518837/delayed UK:RTN -1.03% dropped 11.5% after posting heavy losses in the wake of its takeover of Wagamama, the Asian-themed fast-food chain. The company swung to a pretax loss of £87.7 million in the first half of 2019, compared with a £12.2 million profit over the same period in the previous year.
British plumbing and heating distributor Ferguson /zigman2/quotes/209006722/delayed UK:FERG -0.34% rose 2.3% as it revealed plans to separate its U.K. operations and focus on its U.S. business.