European bourses end the session in the red as global stocks turn lower

European bourses end the session in the red as global stocks turn lower

Novartis announces billion-dollar pharmaceutical deal

Europe’s main equity benchmarks finished Thursday’s session lower after spending much of the day trading higher thanks to better-than-expected corporate results.

But Europe appeared unable to a turn lower in U.S. stocks led by technology and communication-services.

What are markets doing?

The pan-European Stoxx Europe 600 SXXP, -0.42% closed down 0.5% at 361.67, while the U.K.’s FTSE 100 UKX, -0.11% slipped to close 0.4% down at 7,026.99, as Brexit worries continued to influence trade. For both benchmarks it was the worst point and percentage drop in a week.

Germany’s DAX 30 DAX, -0.41% was off 1.1% at the end of Thursday trading, reading 11,589.21 points, and France’s CAC 40 PX1, -0.63% fell 0.6% to 5,116.79 by the closing bell.

Italy’s FTSE MIB Italy index I945, -1.34% ended 1.9% down at 19,087.53, amid turmoil over the country’s budgetary negotiations with the European Union.

The euro EURUSD, -0.0175% last traded at $1.1470, compared with $1.1502 late Wednesday in New York. The British pound GBPUSD, +0.1997% was meanwhile down at $1.3043 from $1.3114.

What is driving the market?
Market participants pointed to strength in a recent spate of earnings as one reason that European equity indexes were tracking slightly higher earlier in the session. But European stocks, which commonly take clues from the U.S. stock market, finished the day lower after U.S. equities turned red led by technology and communication-services names. On top of that, concerns around Britain’s continuing efforts to extricate itself from the EU, which appear to have been delayed amid a border impasse.

U.K. Prime Minister Theresa May on Wednesday during a closely watched summit in Brussels suggested that she was considering an extended Brexit transition period as the British leader failed to forge a new trade and customs pact as Britain is set to exit from the EU in March. An extension could see Britain remain under EU rules until 2021 or longer, according to reports.

A so-called no-deal scenario is looking increasingly likely European Council President Donald Tusk said earlier in the week, saying he harbored “no grounds for optimism.” A no-deal could roil eurozone markets and produce sharp swings in the British pound.

Meanwhile, investors also watched discussions between antiestablishment 5 Star Movement and the far-right League over a full draft budget law that will be sent to the Italian parliament by Saturday, but which is expected to draw anger from EU officials because it would increase the country’s deficit and run afoul of EU fiscal rules. European Central Bank head Mario Draghi was quoted as saying that member states who didn’t respect the EU rules were risking high costs for everyone, according to Reuters.

What are strategists saying?

“Meanwhile in the eurozone, besides Brexit, Italy’s spending plans is another worrying issue for traders as recent comments from EU officials including the president of the European Commission, Jean-Claude Junker downplayed hopes for a breakthrough,” wrote Christina Parthenidou, investment analyst at XM in a Thursday research note.

What stocks are moving

Shares of Paris-based Carrefour SA CA, -1.12% led pan-European gainers, ending the session more than 9% higher, after the supermarket company reported better-than-expected third-quarter sales.

LM Ericsson AB ERICB, +0.85% closed up 6.2% after the Swedish telecom gear maker beat estimates amid “momentum” for the 5G market.

Unilever PLC’s ULVR, +0.56% stock meanwhile slipped to end Thursday 0.9% lower even as the maker of Breyers ice cream and Dove shampoo sold more products at higher prices, helping it deliver stronger third-quarter revenue growth.

Novartis AG NOVN, -0.14% raised its outlook on Thursday, and announced it would acquire radiopharmaceuticals company Endocyte Inc. ECYT, +50.39% in a deal that values it at $2.1 billion, Novartis’s latest effort to transform into a focused-medicines company. Novartis shares rose 1.9%.

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