The pan-European Stoxx 600 slid 2.2% by early afternoon trade, with banks and energy stocks plunging 3.4% to lead losses as all sectors and major bourses slid deep into negative territory.
A surge in Covid-19 cases across the continent caused by the highly transmissible delta variant continues to weigh, with several major European countries forced to reimplement social restrictions, while the U.K. lifted most remaining restrictions on Monday despite reporting a high number of daily cases.
Meanwhile, investors reacted to the news that OPEC and its allies (a group known as OPEC+) reached a deal on Sunday to phase out 5.8 million barrels per day of oil production cuts by September 2022. Coordinated increases in oil supply from the group will start in August, OPEC said in a statement.
The development comes after Brent has surged more than 40% so far in 2021, with demand for crude rising as the global economy recovers from the pandemic.
On Monday morning, international benchmark Brent crude futures plunged 3.34% to $71.12 per barrel. U.S. crude futures also declined 3.62% to $69.21 per barrel.
U.S. stock index futures tumbled in premarket trade on Monday, after the major averages posted their first negative week in four.
Inflation fears are also weighing on stocks after the Consumer Price Index in the U.S. last week showed that inflation jumped 5.4% in June year-over-year, spooking investors. Separately. a U.S. consumer sentiment index from the University of Michigan released on Friday showing that consumers believe prices will jump 4.8% over the next year. This is the steepest climb since August 2008.
Back in Europe, the devastation caused by massive flooding around Germany and Belgium could weigh on sentiment in the region this week, as well as ongoing coronavirus concerns.
In terms of individual share price movement, cruise operator Carnival plunged 7.8% to the bottom of the Stoxx 600, while Swedish industrial valve manufacturer Indutrade climbed 4.6% following a strong second-quarter earnings report.
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– ‘s Eustance Huang and Pippa Stevens contributed to this market report.