By Peter Nurse
Investing.com - European stock markets traded sharply lower Monday, with continuing concerns over rising numbers of Covid-19 cases globally weighing on sentiment. Oil prices are also falling as producers agree to increase output.
At 5 AM ET (0900 GMT), the DAX in Germany traded 1.3% lower, the CAC 40 in France fell 1.4% and the U.K.’s FTSE 100 dropped 1.3%.
A number of European countries, including France, the Netherlands, Greece and Spain, announced new restrictions last week in a bid to curb a rise in infections, largely due to the highly contagious delta variant of the coronavirus.
The French government has since backtracked on plans for sweeping new rules to expand the use of vaccination certificates after massive protests at the weekend. However, fully jabbed travellers returning to England and Wales from France will still have to quarantine from Monday.
This has hit the travel industry, with easyJet (LON:EZJ) stock down 5.3%, IAG (LON:ICAG), which owns British Airways, stock down 4.8%, and Air France KLM (OTC:AFLYY) stock down 3.7%.
Against this background, England is lifting its restrictions Monday, including social distancing rules and limits on social gathering, trusting a successful vaccination program to defend its population from serious illness as the number of its recorded Covid cases tops 50,000 a day.
Staying in Europe, the destruction caused by massive flooding around Germany and Belgium over the last few days could also weigh on sentiment this week. RWE (DE:RWEG) stock fell 3% after the German energy company said the floods have caused tens of millions of euros of damage to its sites.
In other corporate news, the Financial Times reported that Italian fashion group Ermenegildo Zegna has agreed to go public by combining with the special-purpose acquisition company, New York-listed Investindustrial Acquisition Corp., resulting in an enterprise value of $3.2 billion.
Elsewhere, Billionaire investor Bill Ackman rejigs his plans to buy up to 10% of Vivendi's (OTC:VIVHY) Universal Music Group, and will now use his main hedge fund for the purchase, rather than a special purpose acquisition company.
Ubisoft Entertainment (PA:UBIP) stock fell 1% after the games maker delayed the launch of two new games - Rainbow Six Extraction by four months and Riders Republic - by just under two months.
The economic data slate is pretty empty in Europe Monday, but investors will cautiously await Thursday’s meeting of the European Central Bank. The Governing Council is expected to announce more dovish guidance after giving itself the freedom to tolerate slightly higher inflation with its recent strategy review.
Elsewhere, oil prices weakened Monday after a group of top producers agreed over the weekend to boost output, overcoming an internal spat that threatened the stability of the market.
The group, which includes members of the Organization of the Petroleum Exporting Countries and allies like Russia, agreed to add 400,000 barrels a day every month from August 2021 onwards, with Saudi Arabia, the United Arab Emirates, Iraq, Kuwait and Russia also receiving higher baselines against which their output cuts are measured from May 2022.
At 5 AM ET, U.S. crude futures traded 1.3% lower at $70.66 a barrel, while the Brent contract fell 1.2% to $72.72.
Additionally, gold futures fell 0.6% to $1,804.65/oz, while EUR/USD traded 0.2% lower at 1.1780.