European stocks slip as plan to release US reserves pressures oil stocks

European stocks slid in choppy trade on Thursday, deepening a quarterly loss that would be the first in two years, as oil stocks slid on news that the United States was planning to tap into its oil reserves.

The pan-European stock index was down 0.1%, at 0941 GMT, after early gains fueled by some defensive sectors such as utilities.

Oil and gas inventories fell 0.8% as the United States weighed to release a record amount of up to 180 million barrels from its strategic petroleum reserve to control prices which jumped following a conflict between Russia and Ukraine.

TotalEnergies SE, BP Plc and Shell Plc fell between 0.8% and 1.5%.

“The average price of oil will remain higher than expected at the start of the year and will be reflected in inflation, which means that central banks will have no choice but to raise rates,” said Charles- Henry Monchau, chief investment officer at Syz. Bank.

Data showed French inflation rose more than expected to hit a record high in March.

Meanwhile, Germany has triggered a contingency plan under which Europe’s biggest economy could ration electricity if Russia’s ruble payment demand were to disrupt or shut down supply.

But Germany would continue to pay in euros in line with Russian President Vladimir Putin’s assurances, a government spokesman said.

The STOXX 600 is down around 5.8% for the January-March period after seven straight quarters of gains as investors remain cautious about the Ukraine crisis and its impact on inflation and economic growth.

For the month, however, the index was on track to post its first monthly gain of 2022. Analysts attributed this in part to stocks appearing to be a better hedge against inflation than bonds.

“European earnings are seeing positive revisions versus the US and that’s a tailwind. Europe is very cyclical and as cyclicals are up, the stock index is benefiting,” Monchau said.

“There is institutional money that can continue to be invested in risky assets.”

Among individual stocks, Sweden’s H&M fell 8.4% after reporting a lower-than-expected profit for the December-February period.

Brewin Dolphin soared 60.4% after Royal Bank of Canada made a 1.6 billion pound ($2.1 billion) cash offer for the British wealth manager.


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Felix J. Dixon