Europe open: Shares lower on Brexit worries, US/China tensions

European shares started Tuesday’s session lower as heightened US/China tensions and the ongoing Brexit trade talks impasse dampened sentiment.

The pan-European Stoxx 600 index was flat at the opening, with the UK’s FTSE 100 0.3% lower as British Prime Minister Boris Johnson prepared to travel to Brussels for talks with European Commission President Ursula von der Leyen. Dow Jones futures were down 77 points.

US markets had closed lower overnight as the outgoing Trump administration moved to increase tension with Beijing with plans to sanction officials in response to new security laws in Hong Kong.

Concerns over a no-deal Brexit overshadowed news that the world’s first dose of the Pfizer/BioNtech coronavirus vaccine had been administered to 90-year-old British grandmother Margaret Keenan.

The pound also drifted lower on the prospect of the Brexit talks ending without agreement, and was down 0.3% against the dollar and 0.4% against the euro.

“Sterling took another knock on Tuesday, as the Grim Reaper of a no deal Brexit – wearing a Union Flag cloak and a Nigel Farage mask – lurked over its shoulder,” said Spreadex analyst Connor Campbell.

“This did help keep the FTSE’s own dip to a minimum, the index slipping 0.1% as it bobbed around the 6,550 mark.” A weaker pound helps the export-heavy blue chip index.

Investors were also fretting over news that Germany was looking to impose tougher restrictions on movement after a nationwide partial shutdown made little impact on the spread of the disease.

France was also considering a delay on unwinding some Covid lockdown restrictions next week amid signs the country will miss a coronavirus goal set by President Emmanuel Macron.

In equity news, shares in building equipment hire group Ashtead rose 4.8% as the company lifted full year guidance and held its dividend after a strong second quarter prevented a bigger fall in interim profits.