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European Stocks Lower Amid Tech Sell-Off, Brexit Worries

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European equity benchmarks were in the red on Monday morning amid a sell-off in the technology sector and uncertainty over Britain’s political landscape after the governing Conservative Party lost its parliamentary majority in a general election last week.

Britain’s general election, which took place last Thursday, resulted in a hung parliament in which no single political party secured the requisite 326 seats needed to hold a majority in the 650-seat House of Commons. The outcome proved a blow to the Conservative Party, which had previously held a parliamentary majority, with 330 seats, and will now have to strike a deal with another political party so as to govern. It also resulted in a sizable gain in the number of seats held by the main opposition party, Labour.

Ratings agency Moody’s said on Friday that the reduced share of the vote for Theresa May’s Conservative Party and the gains of the anti-austerity Labour Party meant that fiscal consolidation would have a lower priority and the UK government’s public debt will rise further, weighing on the UK government’s profile. It added that the result would heighten uncertainty over Brexit negotiations and increase fiscal risks. Britain’s negotiations with the EU regarding its withdrawal from the bloc are slated to start on June 19.

Oil prices meanwhile, were higher against the backdrop of a weaker greenback. As a dollar-denominated commodity, a cheaper buck tends to make oil more affordable for international buyers. West Texas Intermediate crude oil futures, the main US oil benchmark, were 0.3% higher at $45.98 per barrel while Brent crude, the international gauge, was up by 0.5% at $48.38 per barrel in recent trade.

In equities, Scottish Mortgage Investment Trust was 3.3% lower, leading the decliners on London’s FTSE 100 Index, followed by Micro Focus, a software company, down by 2.6% and Fresnillo, a miner, 1.9% lower. Sage Group, an accounting, payroll and payments solutions company, was down by 1.9%.

On Frankfurt’s DAX, SAP, a technology company, was 1.5% lower, followed by Infineon, a manufacturer of semiconductors, down by 1.1%, Vonovia, a real estate company focusing on residential properties, and Beiersdorf, a maker of personal products, both 1.0% lower. And, on Paris’ CAC-40, SocieteGenerale, a financial services company, was down by 2.1%, Cap Gemini, a provider of outsourcing, technology and consulting services, was down by 1.8%, Vivendi, a media company, was 1.5% lower and L’Oreal, a cosmetics company, was 1.0% lower.

The pan-European Stoxx 600 Index was 0.46% lower, London’s FTSE 100 Index was down by 0.19%, Frankfurt’s DAX was 0.34% lower and Paris’ CAC-40 was down by 0.37% at the time of writing.

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