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StockBeat: Brexit Drama Lifts European Markets; FCA Targets Fund Stocks

By Geoffrey Smith

Investing.com -- Europe’s stock markets are marching higher Thursday, confident that U.K. lawmakers’ decision to vote against a ‘no-deal’ Brexit “at any time” has effectively ended the risk of a disorderly divorce.

At 04:00 AM ET (0900 GMT), the Euro Stoxx 50 was up 20.6 points, or 0.6% at 3,344.05, while Germany's Dax was up 0.4% and France's CAC 40 up 0.7%. The FTSE 100 was lagging, up only 0.3%, after another sharp rise in sterling overnight.

Conventional wisdom is that anything that softens or even cancels Brexit is good for the U.K. and for the European economy, but whether the degree of optimism visible this morning is justified is another question.

European officials are determined to have the whole show wrapped up by May, so that it doesn’t overshadow the European parliament elections. That leaves precious little time for any further maneuvering and leaves the risk of an accidental 'no-deal Brexit' -- which is still the legal default scenario -- very much on the table.

Anyway, the key point this morning is that Prime Minister Theresa May intends to use last night’s vote to bring back her twice-rejected deal for another vote, in the hope that the die-hard Brexiteer lawmakers will finally accept that her deal is the best outcome they can hope for.

Compelling as the drama/farce is, there’s more going on in markets that just Brexit: Chinese industrial production growth slowed sharply in February, adding to fears that its slowdown could extend until the middle of the year.

In Europe, Volkswagen (DE:VOWG_p)is up 0.3% after falling Wednesday as it postponed the IPO of its truck unit Traton. Analysts had hoped the IPO would unlock some value for VW and strengthen its balance sheet as it girds itself for massive investment in electric vehicles. The company also confirmed it’s aiming to cut another 7,000 administrative jobs as part of that restructuring.

Also in the spotlight are U.K. asset managers, who opened lower after the Financial Conduct Authority floated plans that could ban or sharply cut the ‘exit fees’ that they charge to customers. St. James’s Place (LON:SJP) and Hargreaves Lansdown (LON:HRGV) recovered quickly to be up 1.0% and 0.3% respectively, while Jupiter Fund Management (LON:JUP) was down 1.9% and Schroders (LON:SDR) fell 0.5%.

Meanwhile, Italy’s Generali (MI:GASI) and defense and engineering group Leonardo (MI:LDOF) have both risen after upbeat earnings statements. Airbus Group SE (PA:AIR) is taking a breather after rising 4% on expectations that it will profit from the troubles of its rival Boeing (DE:BA).

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