By Peter Nurse
Investing.com - European stock markets traded sharply lower Monday, weighed by renewed regional energy concerns, political turmoil in the U.K., and worries about the health of Swiss banking giant Credit Suisse.
By 03:25 ET (07:25 GMT), the DAX in Germany traded 1% lower, the CAC 40 in France fell 1%, and U.K.’s FTSE 100 dropped 0.6%.
Russian energy giant Gazprom (MCX:GAZP) suspended its gas supplies to Italy over the weekend, in what appears to be the latest iteration of the conflict between Moscow and western Europe over the supply of natural gas since Russia's invasion of Ukraine in February.
Eni (BIT:ENI), the Italian oil and gas company, said it expected the halt in gas flows to continue into Monday.
The European Union energy ministers announced plans on Friday to introduce windfall profit taxes on energy firms, and EU leaders are set to meet at the end of the week to discuss how to step up support for Ukraine and their joint next steps to tame soaring energy prices.
Elsewhere, the political turbulence in the U.K. continued.
Finance Minister Kwasi Kwarteng announced Monday that he has abandoned plans to cut the top rate of income tax, a move that had contributed towards sharp falls in the pound and U.K. bonds.
Prime Minister Liz Truss attempted over the weekend to defend her government's plan to substantially cut taxes, including the removal of the highest income tax rate, but several high-profile Conservative Party figures came out against the move over the weekend, making the position untenable.
In corporate news, Credit Suisse (SIX:CSGN) stock fell over 9% after the Financial Times reported on Sunday that the Swiss bank’s executives spent the weekend reassuring investors about its financial health.
This followed the bank’s credit default swaps, which offer protection against a company defaulting, rising sharply on Friday, climbing to the highest level in at least 10 years.
The main data release Monday will be the latest German manufacturing PMI number, which is expected to show this sector of the Eurozone’s economic powerhouse had contracted further in September.
Oil prices soared Monday on speculation that a group of top producers will agree to a hefty output cut in order to support a market which has seen four straight months of losses.
The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, is set to meet on Wednesday, and Reuters has reported that the members are considering an output cut of more than one million barrels a day.
If agreed, this would be the largest reduction since the pandemic, and would follow on from the cut of 100,000 barrels per day last month.
By 03:25 ET, U.S. crude futures traded 3.4% higher at $82.17 a barrel, while the Brent contract rose 3.3% to $87.95.
Additionally, gold futures traded flat at $1,671.75/oz, while EUR/USD traded 0.2% higher at 0.9815.