Back to top

Image: Bigstock

Brexit Delay in the Cards? Europe ETFs to Rally

Read MoreHide Full Article

Though Europe is seeing a slowdown, its stocks might rally on a host of positive developments. Several Europe ETFs are currently trading at a one-month high with DAX Germany ETF (DAX - Free Report) adding about 2% on Feb 26. Let’s delve a little deeper into what’s working in favor of European stocks.

Chances of a Delay in Brexit

For the first time, the U.K. government announced that it is mulling over options to postpone Brexit. On Feb 26, British prime minister Theresa May noted that “in the event deal fails to secure parliamentary approval on March 12, she will allow lawmakers two further votes.”

On Mar 13, the Commons will be given a chance to agree on the U.K. exit without a deal on Mar 29. Although no-deal is the default option in the Article 50 process, it can be voted down. Then, the Commons will have a chance to request May for a short extension to Article 50, postponing Brexit by a few months, per an article published on CNN. These abrupt policy changes came up due to huge internal differences in both the parties. Whatever the case, the prospect of a delay is strong enough to push Europe stocks higher.

US-China Trade Optimism

U.S. President Donald Trump announced a delay in the increase of tariffs on about $200 billion worth of Chinese goods, citing “substantial progress” in trade talks with Beijing. With this, the year-long trade dispute between the world’s biggest economies seems to be reaching a conclusion. Since the trade spat was a bother for almost the entire world, Europe stocks have heaved a sigh of relief for now (read: 10 ETF Areas to Gain as Trump Delays Additional Tariffs).

Easy Money to Stay Here for Long?

The ECB had indicated that it looks to keep interest rates at the current record low level, at least through summers. But now, the bank seems to be analyzing if the ongoing slowdown is temporary (or protracted) before taking a rate decision. With this, hopes of a few more months of an easy money policy seem to exist in the region (read: Worried About European Growth? Play These 5 ETFs).

ETFs That Are at One-Month High

Below we highlight a few Europe ETFs that have been near a one-month high on Feb 26 and is likely to stay strong if Brexit gets delayed.

Invesco CurrencyShares British Pound Sterling (FXB - Free Report) – Up 1.15%

Ireland iShares MSCI ETF (EIRL - Free Report) – Up 1.08%

First Trust Europe Alphadex Fund (FEP - Free Report) – Up 1.04%

Europe Small-Cap iShares MSCI ETF (IEUS - Free Report) – Up 0.99%

Europe Financials iShares MSCI ETF (EUFN - Free Report) – Up 0.93%

Europe Smallcap Dividend Wisdomtree (DFE - Free Report) – Up 0.87%

Switzerland iShares MSCI ETF (EWL - Free Report) – Up 0.87%

Denmark iShares MSCI ETF (EDEN - Free Report) – Up 0.86%

United Kingdom iShares MSCI ETF (EWU - Free Report) – Up 0.86%

Finland iShares MSCI ETF (EFNL - Free Report) – Up 0.85%

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>