European stock market and Wall Street ended lower in the face of multiple economic, political, and monetary concerns. Paris’ CAC 40 lost 0.61 percent to 6,477.66 points. German Dax fell 0.79%, while the British Footsie fell 0.23%. The EuroStoxx 50 index fell by 0.96%, the FTSEurofirst 300 by 0.46%, and the Stoxx 600 by 0.47%.
Wall Street’s main stock indexes were in the red upon closing in Europe. The Nasdaq posted a loss of more than 2% as investors fled technology stocks due to a rise in Treasury bond yields.
Following Wall Street’s brutal week, the European stock market technology sector (-2.21%) fell sharply last week on rising bond yields.
The energy sector (+0.92%) however, was boosted by the rise in oil prices following the Opec+ decision to keep its production growth moderate next month.
Global risk appetite remains subdued as a result of several uncertainties. These includes those relating to the debt ceiling, the need to adopt budget plans, and Biden’s trade policy towards China.
Additionally, Evergrande Group’s debt and its implications for the Chinese economy also weighed on stocks on Monday.
Mr. Savary, deputy managing director at Prime Partners, said markets have increasingly priced in a ‘stagflation’ scenario. Marked by low growth and high inflation, a headwind for stocks have been churning out record highs.
“Making markets more valuable is fine if you have a viable growth prospect. However, if you are worried about stagflation and the only option is policy tightening (…) then stocks will suffer,” he said.
Oil market is rising
Following OPEC and its allies’ decision to stick to the current production agreement of 400,000 barrels per day (bpd) starting in November, the oil market is rising sharply.
As of Monday, Brent crude had gained 2.76% to $81.47 per barrel, the highest price in three years, and U.S. light crude had reached a high since November 2014 at nearly $78.