European stocks slid lower after a senior UK government minister warned Britain would no longer be in the single market or the customs union, while Asian markets were mixed in overnight trade.
US markets are closed for the Martin Luther King Jr holiday, but investors will brace for a busy week of earnings, including Netflix and IBM on Tuesday, and a series of rate-setting meetings from policymakers including the Bank of Japan and the European Central Bank.
The mood in the UK was sanguine following comments by Sajid Javid, the UK chancellor, who quashed any prospect of regulatory alignment with the EU after Brexit in an Financial Times interview.
“We will not be in the single market and we will not be in the customs union,” said Mr Javid.
Sterling fell as much as 0.4 per cent against the dollar to $1.2960 in morning trade, before paring back some loses in the afternoon.
“Political uncertainty could yet return,” said analysts at Rabobank, who added that the chancellor’s remarks “increased the likelihood that the talks between the UK and EU on the future relationship could be difficult. This emphasises the risk that a disorderly Brexit could still occur at the end of the transition phase in December.”
London’s FTSE 100 index closed down 0.3 per cent while the mid-cap FTSE 250 index slid 0.2 per cent.
Elsewhere in Europe, the region-wide Stoxx 600 index dipped 0.1 per cent, retreating from an all-time high hit on Friday. Frankfurt’s Xetra Dax edged up 0.2 per cent but Paris’s CAC 40 ended the day 0.4 per cent lower.
In Asia, Chinese stocks were steady following the signing of a preliminary “phase one” deal last week by Beijing and Washington that has eased trade tensions between the economic powers.
CSI 300 index of stocks listed in Shanghai and Shenzhen closed up 0.8 per cent while Hong Kong’s Hang Seng fell 1 per cent.
Brent crude rose above $65 a barrel after General Khalifa Haftar shut down a Libyan oil pipeline and halted crude exports from ports under his control. The military strongman is trying to seize political power in the North African country.
Libya’s “oil output is likely to be limited to 72,000 barrels per day, the lowest since August 2011”, said Jim Reid, macro strategist at Deutsche Bank.
Brent crude, the international benchmark, rose 0.6 per cent to $65.24 a barrel while WTI, the US marker, climbed 0.4 per cent to $58.76.
Moves in haven assets such as gold and core government debt were muted. The precious metal rose 0.3 per cent to $1,560 an ounce while the yield on the 10-year UK government bond ticked up 1 basis point to 0.65 per cent.