European stock markets fall as oil producers surge and airlines tumble on Saudi attack - MarketWatch

Reuters

Fires burn in the distance after a drone strike by Yemen's Iran-aligned Houthi group on Saudi company Aramco's oil processing facilities, in Buqayq, Saudi Arabia.

European stock markets fell on Monday as traders reacted to the news of the attack that took half of Saudi Arabia’s oil output offline, sending oil producers much higher while airlines struggled.

The broader Stoxx Europe 600 SXXP, -0.46%  fell 0.63% to 389.31 in a move that masked a major split.

Majors like BP BP, +4.00% BP, +0.53%  and Royal Dutch Shell RDSA, +2.76% RDS.A, +0.57%  rallied as explorers including Aker BP AKERBP, +6.02%  surged.

Airlines including Air France-KLM AF, -4.73%  that are sensitive to jet fuel costs tumbled, as did cruise operator Carnival CCL, -3.65% CUK, +2.11%  . Banks that have rallied of late also dropped, with Deutsche Bank DBK, -2.48%   and Commerzbank CBK, -3.77%   lower.

The German DAX DAX, -0.60%  weakened 0.65% to 12387.81, the French CAC 40 PX1, -0.71%   fell 0.78% to 5611.15 and the U.K. FTSE 100 UKX, -0.24%  fell 0.36% to 7341.03.

Oil prices were off the day’s highs but still strong, with Brent crude oil futures BRN00, +8.60%   up over $5 a barrel, a gain of about 9%.

“To take out over 5% of global supply (in the country with the bulk of ‘spare capacity’) in a single strike - a volume exceeding cumulative non-OPEC supply growth over 2014-2018 - is highly worrying,” said Jon Rigby, an analyst at UBS.

“While U.S.-China trade and U.S. oil supply growth have been the primary price drivers we see a return of the political risk premium as the market has been arguably complacent about risk events,” he said, adding its upside scenario would see oil getting to $80.

U.S. stock futures ES00, -0.39%  were weaker as well, while the yield on the 10-year TMUBMUSD10Y, -3.42%  fell 4 basis points to 1.86%.

Outside of the big oil news, H&M shares HM.B, -2.24%  fell 1.9% after climbing over 50% over the last 12 months. The Swedish chain reported a 12% rise in third-quarter sales and said it had well-receiver summer collections and increased market share.

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https://www.marketwatch.com/story/european-stock-markets-fall-as-oil-producers-surge-and-airlines-tumble-on-saudi-attack-2019-09-16

2019-09-16 09:15:00Z
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