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Sterling struggles, global stocks mixed in wake of Brexit vote

➤ Sterling volatile after Brexit deal defeated in British Parliament.

➤ U.K. Prime Minister Theresa May's government faces no-confidence motion.

➤ Kansas City Fed chief echoes fellow policymakers' pause rhetoric.

➤ Global equities mixed; Wall Street set for soft open.

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The British pound struggled for direction against the dollar, while global equities saw mixed trading as markets assessed the historic defeat of U.K. Prime Minister Theresa May's draft Brexit deal in parliament yesterday.

In a 432-202 vote, the British Parliament overwhelmingly rejected May's draft withdrawal agreement with the European Union, giving the prime minister only until Jan. 21 to present an alternative plan. The defeat triggered opposition leader Jeremy Corbyn to call for a no-confidence motion against May's government in a bid to launch a snap election, but analysts are expecting May to emerge victorious from the motion.

Sterling tumbled more than 1% against the dollar to below $1.28 shortly after results of the vote were announced, before paring losses as May signaled intentions to hold talks with other parties in parliament regarding the next steps to deliver Brexit. The currency traded higher earlier today before erasing gains and was down 0.10% as of 6:30 a.m. ET, while it was up 0.11% versus the euro.

The pound's apparent strength shortly after the vote was likely due to the "low probability" of a successful no-confidence motion against May's government and the increased odds of Brexit being delayed from March 29 as currently planned, ING analysts wrote in a note. Bank of England Governor Mark Carney also said earlier today that the currency's reaction could reflect expectations that fears of a no-deal Brexit have diminished.

The financial community is now placing more weight on the possibility of the U.K. remaining in a customs union as Corbyn's Labour Party demands, or even a second referendum to reverse the process of leaving.

Elsewhere, the euro dipped 0.18% against the dollar, while the Japanese yen slipped 0.14%. The Turkish lira climbed 1% versus the dollar as the Turkish central bank decided to keep interest rates unchanged, as expected.

European equities were mixed in the wake of the Brexit vote, with the FTSE 100 and the DAX index down 0.60% and 0.14%, respectively, while France's CAC 40 ticked up 0.05%. In Asia, Japan's Nikkei 225 dipped 0.55%, while Hong Kong's Hang Seng Index was up 0.27% and the Shanghai SE Composite index was broadly unchanged.

Overnight, the S&P 500 index gained more than 1%, while the tech-heavy Nasdaq Composite index advanced 1.71%, with Netflix Inc. ending the session with a 6.52% surge on new subscription plan prices for U.S. customers. Futures for the S&P 500 edged 0.14% higher, while those for the Nasdaq 100 ticked down 0.01%.

Yields on 10-year Treasurys added 2 basis points to 2.74%. Federal Reserve Bank of Kansas City President Esther George, viewed as one of the more hawkish policy setters on the Federal Open Market Committee, backed a pause in the Fed's interest rate hiking spree, saying the central bank should wait to see how the economy performs in the coming months.

In commodities, Brent crude oil was down 0.10% to $60.58 per barrel on the ICE Futures Exchange. Gold inched up 0.05% to $1,289.10 per ounce.

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The day ahead:

8:30 a.m. ET – U.S. import and export prices (Econoday consensus: -1.2% month over month import, -0.3% month over month export)

10:00 a.m. ET – U.S. NAHB housing market index (Econoday consensus: 57)

10:30 a.m. ET – EIA Petroleum Status Report

2:00 p.m. ET – U.S. Beige Book