Most European stock markets edged out gains yesterday as traders brushed aside a Brexit court ruling seen as making little difference to Britain’s timetable for leaving the EU.
Meanwhile, the pound slipped a bit after the UK Supreme Court’s verdict that Britain’s government must win parliament’s approval before beginning formal Brexit negotiations.
The announcement “is unlikely to ultimately make a large difference and the balance of probabilities suggest that the self-imposed deadline will be met,” said XTB analyst David Cheetham.
Indeed, the UK government said the court ruling would do “nothing” to change Prime Minister Theresa May’s timetable of triggering Article 50 – the formal procedure for leaving the EU – by the end of March at the latest.
But the main opposition Labour party and the Scottish National Party (SNP) have said they will introduce amendments to any government legislation to start Brexit, which could potentially cause a delay.
“Sterling fell and then recovered some of the losses following the Supreme Court’s ruling as the judges’ decision casts a pall of uncertainty over the triggering of Article 50,” said senior ETX Capital analyst Neil Wilson.
“The moves need to be seen in the broader context of sterling’s plunge since June, however. These are pretty minor adjustments and the pound is stuck in a range it’s traded in since the start of October of between roughly $1.20 and $1.27,” he added in a client note.
Analyst Michael Hewson at CMC markets said: “It’s been a fairly uninspiring day for European markets today, notable for a number of high profile profit warnings.”
Shares in EasyJet slumped nearly 9% after the no-frills airline said it expects full-year profits to suffer a bigger-than-expected hit from a soft pound.
Sterling’s weakness, which has seen it slump around 18% against the dollar and 14% versus the euro since June’s referendum result, has been impacting companies’ balance sheets both positively and negatively.
“The weakness of sterling is expected to impact EasyJet’s year-on-year profit before tax for financial year 2017 by around £105mn ($131mn),” the company said in a trading update, up from an estimate of about £90mn in November.
EasyJet’s heavy exposure to the uncertain British economy and weak pound have seen investors shun the airline’s shares, which slumped 42% last year, a drop much worse than its rivals.
But EasyJet’s losses yesterday were dwarfed by British telecoms and TV group BT, whose shares plunged 20% after the company warned that its profits would take a much larger hit than expected from accounting irregularities in Italy.
Those sharp losses helped push London’s FTSE 100 index just into negative territory at the end of the day with a loss of less than one point.
Wall Street stocks showed modest gains in morning trading as earnings disappointments from Verizon, Lockheed Martin and others limited buying sentiment.
A man speaks on a mobile phone underneath a BT logo in London. Shares in the British telecom firm plunged 20% yesterday after the company warned that its profits would take a much larger hit than expected from accounting irregularities in Italy.
