European stock markets built on last week’s selloff Monday, with the benchmark index heading for its lowest close in more than 15 months as investors continued to dump risky assets such as equities.
The Stoxx Europe 600 index SXXP, -2.66% slumped 2.4% to 318.12, setting it on track for its lowest close since Oct. 20, 2014, according to data from FactSet.
Germany’s DAX 30 index DAX, -2.85% erased 2.8% to 9,028.19, while France’s CAC 40 index PX1, -2.77% lost 2.6% to 4,091.50. The U.K.’s FTSE 100 index UKX, -2.13% skidded 2% to 5,732.65.
With no major data releases or central bank events on Monday, investors stuck to their negative sentiment from last week, when the pan-European benchmark posted a 4.8% weekly slide. That week delivered a disappointing headline reading on U.S. nonfarm payrolls, a hit for European exporters from a stronger euro and continued jitters in the commodity markets.
Chinese stock markets are closed for trade all week to celebrate the Lunar New Year, providing little direction for European stocks at the open. However, data out over the weekend showed China’s foreign-exchange reserves fell to the lowest level in more than three years last month, in another sign of capital flight as the yuan weakens.
“Sentiment continues to remain downbeat because of growing concerns about the global economy, which is not looking healthy at all at the moment, with growth in China slowing down and the U.S. struggling. In addition, oil prices have been unable to further extend their recent gains,” said Fawad Razaqzada, technical analyst at Forex.com, in a note.
“It looks like oil traders are once again discouraged by a slightly stronger dollar and the lack of any breakthrough in talks between some OPEC and non-OPEC producers,” he added.
Oil jitters: Oil futures remained volatile on Monday and weighed on Europe’s energy-related companies. Crude oil CLH6, -2.78% lost 3.1% to $29.94, after having traded as high as $31.38 early in the day.
Shares of Italian oil-services company Saipem SpA SPM, -21.15% sank 21%, Seadrill Ltd. SDRL, -14.03% lost 13%, Tullow Oil PLC TLW, -6.96% erased 6.5%, and Amec Foster Wheeler PLC AMFW, -6.05% fell 6.2%.
Shine for gold: Gold prices GCJ6, +3.28% jumped 1.9% to $1,179.50 an ounce, benefiting from the perceived haven status of the metal. Shares of Randgold Resources Ltd. RRS, +4.62% GOLD, +9.55% rose 4.3% after the West African gold miner lifted its dividend after posting record output.
Precious-metals miner Fresnillo PLC FRES, +2.47% climbed 2.1%.
Banking selloff: European banking shares took the brunt of the selloff on Monday, with the Stoxx Europe 600 Banks Index FX7, -3.60% slumping 3.6%. The index last week logged six straight weeks of declines, its longest weekly losing stretch since 2008, according to FactSet data.
The exodus out of bank stocks in Europe comes amid a perfect storm of lackluster earnings, negative interest rates, high debt levels and weak economic activity, according to analysts.
Among biggest decliners in the sector on Monday, shares of Eurobank Ergasias SA EUROB, -27.37% plunged 27%, Banca Monte dei Paschi di Siena SpA BMPS, -8.05% dropped 7.5%, Commerzbank AG CBK, -6.65% fell 5.8%, and BNP Paribas SA BNP, -4.53% lost 4%.
Other movers: Shares of Novozymes AS NZYMB, -4.59% slid 5% after the Danish enzyme maker said it’s splitting the company into three divisions in an effort to boost both innovation and its ability to act swiftly if the market changes.
Swedish lock maker Assa Abloy AB ASSAB, -8.14% lost 7.5% after the company said it’s seeing weaker demand in many emerging markets.
If you’ll be in London on Tuesday, Feb. 23, you’re invited to join us for an evening of cocktails and conversation on the topics of shifting monetary policy, growth, currencies, and the outlook for investing opportunities and risks in European and global markets.
Our panelists for the evening will include MarketWatch Personal Finance and Investing Columnist Robert Powell; Mark Hulbert, Editor of the Hulbert Financial Digest; and Virginie Maisonneuve, Founder and Managing Director of Maisonneuve Global Advisors.
Source: MarketWatch
