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Nord Stream I, the biggest single pipeline carrying Russian gas
to Germany, starts annual maintenance on Monday. Flows are
expected to stop for 10 days, but markets fear the shut-down
might be extended due to war in Ukraine and could disrupt plans
to fill storage for winter.
The pan-European STOXX 600 index broke a three-day winning
streak to drop 0.8%, after posting its best week in seven on
Friday.
Investors are worried about the effects on industries across the
board, Susannah Streeter, senior investment and markets analyst
at Hargreaves Lansdown said, adding that if emergency plans
implemented by the government include rationing, then they would
really hurt growth within economies highly reliant on exports
from Russia.
A complete halt of Nord Stream I would keep European gas prices
higher for longer, piling pressure on the European Central Bank,
which is set to increase its key interest rate later this month
for the first time in more than a decade.
Uniper, among the first to flag a hit from falling Russian
supplies, fell 7.6% as a dispute between Germany and Finland
over the cost of rescuing the gas importer flared.
All major European sectors were in red, led by a 2.5% fall in
miners as metal and iron ore ore prices slumped on worries about
rising COVID-19 cases in Shanghai leading to more curbs.
Luxury stocks, which derive a chunk of their demand from China,
slipped with LVMH losing 1.9%. [MET/L] [IRONORE/]
Markets have had a tough couple of weeks on recession worries,
and the euro approaching parity with the dollar adds to investor
worries about the hit to earnings. [FRX/]
Investor will be watching U.S. June inflation data due on
Wednesday, after stronger-than-expected jobs data last week
firmed the case for another 75-basis-point hike by the Federal
Reserve this month.
"All we need now is a strong U.S. CPI print, and a 75bps hike
from the FOMC later this month will be seen as the most likely
outcome, very much reinforcing the fear that bringing inflation
back to target will trump any concerns about slowing growth,"
said Stuart Cole, senior macro strategist at Equiti Capital.
Among earnings, shares of Danske Bank and Wizz Air slipped 4%
each after dour forecasts.
(Reporting by Susan Mathew in Bengaluru; Editing by Sherry
Jacob-Phillips)
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