European stocks choppy in early trade

The Stoxx Europe 600 switched between gains and losses in early deals, after Asian markets rose.

Global markets struggled to find direction on Wednesday, as some investors took a pause after a recent rally that saw Wall Street surge to record highs.

The Stoxx Europe 600 switched between gains and losses in morning trade in Europe, weighed down by financial and automobile stocks. France’s CAC 40 rose 0.2 per cent while Germany’s DAX fell 0.2 per cent after gains in Asian markets.

That followed another record close on Wall Street on Tuesday, with the Dow Jones Industrial Average surging 0.7 per cent. It joined the S&P 500, which notched its second record close in two days. The gains came after three weeks of volatile trading in the wake of UK’s surprise vote to exit the European Union last month.

On Wednesday, Prime Minister David Cameron is set to tender his resignation to the Queen, leaving Theresa May to take over as UK’s new leader later in the day after three weeks of political turmoil since the Brexit referendum. The British pound was down 0.2 per cent against the greenback, at 1.324.

Some investors foresee further uncertainty ahead.

“Brexit is still a live risk that markets seem to underestimate,” said Nick D’Onofrio, chief executive of London-based North Asset Management. “It will lead to a slowdown in the UK, which will spill over to Europe.”

The Bank of England meets on Thursday and analysts expect it to lower its benchmark lending rate by a quarter of a percentage point to 0.25 per cent to counter the fallout from the Brexit vote.

In the US, with earnings season now underway, analysts forecast corporate earnings in the S&P 500 to fall for a fifth straight quarter.

Asian equity markets gained on Wednesday, boosted by investor expectations that Japan may consider more stimulus measures to jump-start its economy. The Japanese government is planning a “bold economic stimulus” to defeat deflation, Chief Cabinet Secretary Yoshihide Suga said.

Japan’s Nikkei Stock Average closed 0.8 per cent higher while the yen rose 0.4 per cent against the dollar at Yen104.3 on Wednesday.

In commodities, Brent crude, the international oil price benchmark, traded down 1.7 per cent at $47.65 a barrel Wednesday after industry data showed a surprise increase in US oil supplies. The official government data will be released later in the trading day.

- Dow Jones newswires