European stocks slip on fears of energy supply shortages

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The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, May 25, 2022. REUTERS/Staff

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  • Healthcare, real estate among biggest declines
  • EDF jumps, France considers nationalization cost of around 8 billion euros
  • Saipem plunges after 70% cash call underwriting

July 12 (Reuters) – European stocks fell for a second session on Tuesday, hit by worries about an energy supply crisis, while rising COVID-19 cases in China heightened fears of a global recession.

The pan-European STOXX 600 index (.STOXX) fell 0.4%, with healthcare (.SXDP), technology (.SX8P) and luxury stocks weighing the most. Real estate stocks (.SX86P) slipped 1.5%.

Concerns are high that a maintenance shutdown of the Nord Stream 1 gas pipeline from Russia to Germany could be extended due to the Russian-Ukrainian war, affecting the region’s energy supply. Read more

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Investors fear that Russian President Vladimir Putin may use gas as a weapon in retaliation for Western sanctions against his invasion of Ukraine, said Andrea Cicione, chief strategy officer at TS Lombard.

“It could get worse and people are expecting it, but it’s not fully in the price yet,” he said.

Gas prices in Europe would then stay higher for longer, adding to eurozone inflation already at record highs and increasing pressure on the European Central Bank, which is expected to raise interest rates by at least 25%. basis points this month.

Meanwhile, miners (.SXPP) fell 0.8% as several Chinese cities imposed new COVID-19 restrictions to curb new infections, which could be another blow to China’s economic growth. world’s second largest economy and the largest consumer of metals. Read more

The STOXX 600 has fallen in five of the past six months due to recession fears. Asset manager BlackRock said on Monday it had reduced its exposure to developed market equities as it expects volatility amid central bank attempts to temper inflation. Read more

In the United States, June inflation data is expected to arrive on Wednesday, bolstering bets of another 75 basis point interest rate hike later this month.

Oil stocks (.SXEP) made small gains despite falling crude prices. “Energy still remains a popular hedge against geopolitical uncertainty,” UBS said in a note.

“We expect commodity prices to remain high. Amid the ongoing war in Ukraine, the sector is also acting as a hedge against sanctions limiting the availability of supply of different commodities.”

Among individual stocks, electricity giant EDF (EDF.PA) jumped 5.3%, after sources said the French government was set to pay more than 8 billion euros (8 $.05 billion) to bring the company back under full state control. Read more

Swedish cloud communications company Sinch (SINCH.ST) fell 19.9%, extending declines after a short-selling report.

Italy’s Saipem (SPMI.MI) fell after the energy services group said investors had taken up only around 70% of the new shares it was issuing in a 2-day cash call. Billions of Euro’s. Read more

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Reporting by Susan Mathew in Bengaluru; Editing by Rashmi Aich and Arun Koyyur

Our standards: The Thomson Reuters Trust Principles.

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