European stocks brush off Brexit court ruling

European stock markets rebounded slightly on Tuesday, with London higher and sterling steady as traders brushed aside a Brexit court ruling.
Sterling reacted little to a UK Supreme Court judgment 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 table 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.
Sterling’s weakness, which has seen it slump around 18 percent against the dollar and 14 percent versus the euro since June’s referendum result, is impacting companies’ balance sheets both positively and negatively.
Shares in EasyJet slumped around 8 percent in Tuesday deals after the no-frills airline said it expects full-year profits to suffer a bigger-than-expected hit on a soft pound.
“The weakness of sterling is expected to impact EasyJet’s year-on-year profit before tax for financial year 2017 by around £105 million ($131 million, 122 million euros),” the company said in a trading update, up from an estimate of about £90 million in November.
EasyJet’s heavy exposure to the uncertain British economy and weak pound have seen investors shun for a while the airline’s shares, which slumped 42 percent last year, a drop much worse than its rivals.
But EasyJet’s losses Tuesday were dwarfed by British telecoms and TV group BT, whose shares plunged 18 percent after the company warned that its profits would take a much larger hit than expected on accounting irregularities in Italy.

Source: Arab News