European stocks fell sharply on Monday as markets digested the latest OPEC + oil production announcement and continued to ruminate on inflation and rising Covid-19 cases.
European markets followed their Asia-Pacific counterparts lower at the start of the session, as investors reacted to news that OPEC and its allies (a group known as OPEC +) have reached a deal on Sunday to phase out 5.8 million barrels per day of oil production. cuts by September 2022. Coordinated increases in the group’s oil supply will begin in August, OPEC said in a statement.
The move comes after Brent has risen more than 40% so far in 2021, with demand for crude increasing as the global economy recovers from the pandemic.
On Monday morning, futures on international benchmark Brent crude slipped 1.35 %% to $ 72.60 a barrel. US crude futures also fell 1.41% to $ 70.80 a barrel.
Inflation fears weigh on stocks after the U.S. Consumer Price Index last week showed inflation jumped 5.4% in June year-on-year, scary investors. Separately. a University of Michigan US consumer confidence index released on Friday shows consumers believe prices will rise 4.8% over the next year. This is the steepest climb since August 2008.
Meanwhile, in Europe, the devastation caused by massive flooding around Germany and Belgium could weigh on sentiment in the region this week, as well as lingering concerns over coronaviruses.
An increase in Covid-19 cases across the continent caused by the highly transmissible delta variant continues to weigh in, with several major European countries forced to reapply social restrictions, while the UK is expected to lift most remaining restrictions on Monday despite the reporting of a high number of daily cases.
In terms of individual stock price movements, cruise line Carnival fell more than 6% early in trading to the low of the Stoxx 600, while Swedish maker Husqvarna climbed 2.8% to lead the index.
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– CNBC’s Eustance Huang and Pippa Stevens contributed to this market report.