European markets opened lower on Friday as investors monitored political turmoil in the U.S. and monetary policy decisions from various major economies.
The pan-European Stoxx 600 index was around 0.9% lower shortly after the opening bell, with every sector and all major bourses in negative territory.
The United States was plunged into fresh political uncertainty on Thursday evening, after the failure of a Trump-backed spending bill, whose passage would have prevented a government shutdown. Dozens of Republican lawmakers voted against the deal to fund the government for three months and suspend the U.S. debt ceiling for two years, meaning a partial government shutdown will commence on Friday night.
Meanwhile, U.S. president-elect Donald Trump issued a fresh trade threat to the EU, floating on social media the possibility that he would impose new tariffs on the bloc unless it purchased more oil and gas from the United States.
Elsewhere, China held its key interest rates steady Friday, in line with expectations. The move came in the same month that Beijing’s top officials vowed to ramp up policy easing measures.
The latest development from the People’s Bank of China arrived in the same week as monetary policy updates from the Federal Reserve and the Bank of England. On Wednesday, the Fed announced a 25-basis-points cut to its core interest rate, while the Bank of England held policy unchanged at its own Thursday meeting.
While the Bank of England’s decision was widely anticipated, a split in the vote and Governor Andrew Bailey’s comments about the economic impact of the newly elected Labour government’s budget rattled markets, sparking a dip in the value of the British pound and yields on Britain’s 10-year Gilts to tick higher.
Russian policymakers are set to update their monetary policy on Friday.
The U.K.’s retail sales for November, France’s November Producer Price Index, and the current state of consumer confidence in Italy will also be released on Friday.
— CNBC’s Christina Wilkie, Sonia Heng and Anniek Bao contributed to this European markets summary.
