By Peter Nurse
Investing.com - European stock markets traded lower Monday, starting the week on a cautious note as investors fretted over the outlook for global economic growth amid rising geopolitical tensions.
By 3:40 AM ET (0740 GMT), the DAX in Germany traded 0.6% lower, the CAC 40 in France fell 0.8%, and the U.K.’s FTSE 100 dropped 0.4%.
An illustration of the global economic slowdown came from China earlier Monday, as April retail sales plunged 11.1% on the year, almost twice the drop forecast, while industrial output fell 2.9% instead of the slight increase expected, pointing to the deep damage COVID lockdowns were doing to the world's second-largest economy.
Investors are also keeping a close eye on geopolitical developments as Finland and Sweden moved closer to applying for membership in NATO, ending years of neutrality as Russia’s invasion of Ukraine forced the two Nordic nations to reassess their positions.
The entry of Sweden and Finland would significantly extend the alliance’s border with Russia, a move that will annoy Moscow which has consistently warned the pair of potential consequences.
The European Union publishes its economic forecasts later in the session, and the market will be looking to see the impact of the Ukraine war and soaring inflation on growth expectations. In February, the EU economy was expected to grow by 4.0% in 2022 and by 2.8% in 2023.
In the corporate sector, Ryanair (IR:RYA) stock rose 2.4% after the Irish airline tentatively said it would return to profit this year, even after posting an annual 355 million euro ($369 million) loss to the end of March.
Renault (EPA:RENA) stock fell 0.6% after the French carmaker announced it will sell its majority stake in carmaker Avtovaz to a Russian science institute, with a six-year option to buy back the stake.
Oil prices weakened Monday on signs of weakening Chinese demand but remained at elevated levels as the European Union prepared an import ban on Russian crude, further roiling global supply.
China, the world’s largest importer of oil, processed 11% less crude in April than a year earlier, according to data released earlier Monday, with daily throughput falling to the lowest since March 2020 as refiners slashed operations in the face of dwindling demand due to widespread COVID-19 lockdowns.
By 3:40 AM ET, U.S. crude futures traded 0.8% lower at $107.80 a barrel, while the Brent contract fell 1.1% to $110.35.
However, both benchmarks posted sharp gains on Friday, and the WTI contract recently posted its highest level since March 28, with the European Union still expected to agree to a phased embargo on Russian oil this month despite concerns about supply in eastern Europe.
Additionally, gold futures fell 0.6% to $1,798.29/oz, while EUR/USD traded 0.1% higher at 1.0418.