By Sruthi Shankar
(Reuters) – European shares edged lower on Thursday, as strong earnings from Sweden’s Ericsson were offset by fading optimism over the Brexit deal amid investor worries about its support in the British parliament.
The pan-European STOXX 600 index <.STOXX> closed down 0.1% after gaining as much as 0.9%, as investors initially cheered news that the European Union and Britain had clinched a deal on the terms of Britain’s exit from the bloc.
Shares in domestically focused British companies and Irish firms, which have come to be seen as a barometer on Brexit sentiment, gave up gains as the Northern Irish Democratic Unionist Party (DUP) said it would vote against the accord at an extraordinary session on Saturday.
The FTSE midcap index <.FTMC> closed up just 0.16%, while Irish stocks <.ISEQ> dropped 0.9% amid doubts over whether Prime Minister Boris Johnson will be able to win the British parliament’s approval for any deal.
“Unfortunately, it is too early. I wouldn’t be taking any direction at this point. It doesn’t make sense to be taking steps either way on sterling at this point,” said Michael Bell, Global Market Strategist at JP Morgan.
The pound saw wild swings, sending London’s internationally focused FTSE 100 <.FTSE> lower initially but the index closed up 0.2% with help from blue-chip firms.
France’s CAC 40 <.FCHI> eased 0.4% after hitting a fresh 12-year high earlier, while Germany’s DAX <.GDAXI> closed down 0.1%, although near its strongest level in over a year. An index of eurozone stocks <.STOXXE> fell 0.2%.
“The deal should be seen as a better scenario for both sides (Britain and the EU) than a no-deal…but Germany is sort of stuck in a system where global trade is declining. It’s a similar situation for the rest of Europe,” said Art Baluszynski, head of research at Henderson Rowe.
Fears of a slide into recession continue to dog Europe and not all earnings were upbeat, with Swiss banking software maker Temenos
Swedish telecoms gear maker Ericsson
“There was a consensus view on Ericsson that maybe they’ve disappointed on the margins which was holding people back,” said Mark Taylor, sales trader at Mirabaud.
“But there’s a lot of demand to get into the 5G theme, and Ericsson’s probably the biggest, most liquid name in Europe to play that theme.”
Shares of Pernod Ricard
(Reporting by Sruthi Shankar and Medha Singh in Bengaluru; additional reporting by Joice Alves in London, Editing by William Maclean)