Energy supply crisis, COVID woes weigh on European stocks

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, July 7, 2022. REUTERS/Staff

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  • Nord Stream I begins annual maintenance
  • Autos and miners among the big losers in the sector
  • Dufry to buy Italian Autogrill, shares jump
  • US inflation data should make bets on Fed tightening

July 11 (Reuters) – European stocks fell on Monday, dragged lower by economically sensitive stocks, as worries about an energy supply crisis and new COVID-19 cases in China hurt to risk appetite and heightened concerns about a recession.

Nord Stream I, the largest pipeline carrying Russian gas to Germany, began its annual maintenance on Monday, with flows set to stop for 10 days, but governments, markets and businesses fear the shutdown could be extended because of the war in Ukraine. Read more

The pan-European STOXX 600 index (.STOXX) broke a three-day winning streak to end down 0.5%, after posting its best week in seven on Friday.

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China-exposed autos (.SXAP) fell 2.8%, the largest among European sectors, and dragged Germany’s DAX (.GDAXI) down 1.4%.

Miners (.SXPP) fell 1.9% as metals and iron ore prices tumbled on fears rising COVID-19 cases in Shanghai could lead to more restrictions. Read more

Investors are worried about the effects on industries across the board, said Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, adding that while the government’s contingency plans included rationing, they would would really hurt growth in economies heavily dependent on Russian exports.

A complete shutdown of Nord Stream I would keep European gas prices higher for longer, putting pressure on the European Central Bank, which is expected to raise its key rate later this month for the first time in more than a year. decade.

Uniper (UN01.DE), among the first to report a blow from falling Russian supplies, fell 14.4% as a dispute between Germany and Finland over the cost of bailing out the importer of gas burst. Read more

Markets have had a tough few weeks due to recession worries, and the approaching parity between the euro and the dollar is adding to investors’ worries about the impact on earnings.

Eurozone finance ministers said on Monday tackling inflation was the current priority despite weaker growth in the bloc, as they are expected to be told of a deteriorating economic outlook by the European Commission . Read more

Investors await US inflation data in June on Wednesday for further clues on the path of US interest rates later this year, followed by an upcoming second-quarter reporting season for signs on how companies are doing in an environment of rising inflation and tighter financial conditions.

A gauge of eurozone lenders (.SX7E) plunged 2.3% following a sharp drop in eurozone bond yields. Read more

Defensive sectors gained, with Utilities (.SX6P) up 1.3%.

Sinch (SNCH.ST) fell 27.5% as short seller Ningi Research shorted the Swedish cloud communications company.

Dufry (DUFN.S) gained 3.8% after the duty-free retailer agreed to buy Italian airport and highway caterer Autogrill (AGL.MI). Read more

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Reporting by Susan Mathew and Devik Jain in Bengaluru; Editing by Sherry Jacob-Phillips and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

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