Top Stories
European stocks eye worst day in over a month on looming energy crisis
By Anisha Sircar
(Reuters) -European shares were on Monday set for their worst day in more than a month as worries about tightening gas supplies from Russia, hawkish signals from the European Central Bank and weak economic outlook weighed on investors’ minds.
The continent-wide STOXX 600 fell 1.1% in morning trade to touch its lowest level since July 28.
Russia will halt natural gas supplies to Europe for three days at the end of the month, energy giant Gazprom said on Friday, piling pressure on the continent as it seeks to refuel ahead of winter.
Germany’s top importer of Russian gas, Uniper, tumbled 8.1% to hover near record low, while its parent Fortum fell 3.7%.
“It’s clear that the euro zone economy could teeter into recession this winter dependent on whether energy stockpiles can last through the coldest months,” said Jane Foley, senior forex strategist at Rabobank. “Tomorrow’s August PMI data will provide a snapshot as to how the euro zone economy has been holding up recently.”
Focus is on euro zone flash purchasing manager index (PMI) data due on Tuesday, and minutes of the European Central Bank’s (ECB) last policy meeting on Thursday that are likely to sound hawkish. [O/R]
The ECB must keep raising rates even if a recession in Germany is increasingly likely, as inflation will stay uncomfortably high through 2023, Bundesbank President Joachim Nagel told a German newspaper.
Markets currently price in a 60 basis point hike for September and a combined 130 basis points of moves for the remainder of the year.
After rallying more than 11% since mid-June lows, European markets have sagged in the recent days as investors fret over the impact of soaring inflation and tightening financial conditions on the economic outlook.
Credit Suisse slipped 0.6% to a fresh record low. The Swiss lender appointed Deutsche Bank’s Dixit Joshi as chief financial officer and promoted EMEA chief Francesca McDonagh to chief operating officer.
French supermarket retailer Carrefour fell 1.7% after saying it would freeze prices on 100 of its products to help people tackle soaring inflation in the country.
(Reporting by Anisha Sircar in Bengaluru; Editing by Anil D’Silva and Dhanya Ann Thoppil)
Frequently Asked Questions about European stocks eye worst day in over a month on looming energy crisis
1What is the STOXX 600?
The STOXX 600 is a stock index that represents the performance of 600 large, mid, and small capitalization companies across 17 European countries.
2What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
3What is a recession?
A recession is a significant decline in economic activity across the economy lasting longer than a few months, typically visible in GDP, income, employment, and production.
4What is a hawkish monetary policy?
A hawkish monetary policy refers to a stance where a central bank is focused on controlling inflation, often through increasing interest rates.
