European stocks drop as oil’s pullback weighs on energy shares

European stocks slide Thursday, on track for a second day of losses, as energy shares were weighed by a downturn in oil prices.

The Stoxx Europe 600 fell 1% to 341.04. All sectors fell, led by a drop in the oil and gas group SXEP, -1.35% .

Among oil producers, Neste Corp. declined 2.7%, France’s Total SA gave up 1.7%, and Spain’s Respsol SA  fell 1.6%. Oilfield data-services provider TGS-NOPEC Geophysical Co. ASA  slumped 3.7%.

Crude prices turned lower in early European trade, with Brent slipping 0.3% to $52.33. West Texas Intermediate futures were off 0.2% at $51.15. But oil prices were still on track for a weekly jump of more than 5%.

“Oil has rolled over a bit … and oil really has been driving the gains. We’ve seen the oil and gas sector the best performer over the few days, and with this pullback today [in oil prices], we’re left without other catalysts,” said Jasper Lawler, market analyst at CMC Markets.

Bonds in focus: The European Central Bank on Wednesday kicked off its purchases of corporate bonds as part of its stimulus efforts for the eurozone.

“But it didn’t really translate into strength in equities. There’s been a shift in focus to bonds, and if we couldn’t get any momentum going from that central bank intervention, what can [do it]?,” Lawler said.

In the bond market, the yield on the U.K. 10-year gilt hit a record low of 1.222%, according to Tradeweb. The yield on the 10-year German bund was down 1 basis point at 0.042%. Yields move in opposite direction from prices.

Indexes: Germany’s DAX 30 gave up 1.2% to 10,091.33, and France’s CAC 40 lost 1.1% to 4,401.73.

Italy’s FTSE MIB was off 1.1% to 17,716.02, while Spain’s IBEX 35 fell 0.8% to 8,765.80. The U.K.’s FTSE 100 dropped 0.8% to 6,250.86

The euro was down 0.3% at $1.1361 as the dollar switched modestly higher against major rivals.

Movers: Essentra PLC  shares plunged 28% following a profit warning from the plastics supplier.

Boliden AB rose 1.2% after Barclays raised its price target on the mining and smelting company. “Boliden has rarity value in European equity markets offering meaningful and investible exposure to zinc prices,” said Barclays.

Source: MarketWatch

Leave a comment