European stock markets edged lower in morning trade on Monday amid continued political uncertainty in Italy and fading hopes of an OPEC production cut which pushed oil prices lower.
The pan-European STOXX 600 was down 0.82 percent. Investors are increasingly worried over the upcoming referendum in Italy that could potentially lead to the fall of the Italian government and raise possible concerns over the recapitalization of the banking system.
Italy in focus
Italian banking stocks and other euro area lenders were under pressure on Monday. Unicredit was trading lower after Barclays cut its price target for the stock. Spain’s Banco Popular was in negative territory after Credit Suisse cut its price target on the stock.
Hopes of OPEC deal fade
Meanwhile, oil prices fell on Monday morning as uncertainty on an OPEC deal intensifies. OPEC members are holding bilateral meetings as they try to reach an agreement at a general meeting on Wednesday.
Libya’s National Oil Corporation (NOC) said on Sunday it would not take part in any OPEC production cuts for the “foreseeable future”, according to Reuters, and the Saudi Arabian Energy Minister Khalid al-Falih also said that he believed the oil market would balance itself next year even if producers did not intervene. The STOXX 600 oil and gas sector was sharply lower.
Aberdeen shares rally
In corporate news, Aberdeen Asset Management reported a 28 percent drop in pretax profit for the full year to the end of September. The company reported net outflows of £32.8 billion ($41 billion) but said that the value of its assets under management rose 10 percent despite the outflows. This gave investors optimism sending shares sharply higher.
Meanwhile, London-listed asset manager Man Group was trading near the bottom of the STOXX 600 after Exane BNP Paribas cut its price target on the stock by 20 percent.
Actelion was trading in positive territory after Johnson & Johnson confirmed on Friday it was in early talks to takeover the Swiss biotech firm
Dollar pullback helps miners
Basic resource stocks outperformed the broader market on Monday as the dollar index – which tracks the greenback against a basket of currencies – pulled back on Monday amid a fall in oil prices, as the “Trumpflation” trade seen of late suffered a setback.
This led to a rise in the price of gold helping push precious metal miners Fresnillo and Randgold Resources higher. Other metals were also trading higher giving a boost to the broader mining sector.
On the data front, France will see its final GDP (gross domestic product) reading for the third quarter and President Mario Draghi of the European Central Bank is due to speak at the European Parliament.