By Peter Nurse
Investing.com - European stock markets traded sharply lower Monday, as a jump in reported Covid-19 cases over the weekend prompted fears of a second wave of infections. Losses at BP (NYSE:BP) after it took hefty charges also weigh.
At 3:45 AM ET (0745 GMT), the DAX in Germany traded 2.6% lower, France's CAC 40 fell 2.7%, the U.K.'s FTSE index was down 2.1%.
Earlier Monday, oil giant BP (LON:BP) said it expects to take up to $17.5 billion of charges in its second-quarter earnings to reflect what it expects will be the "enduring" effects of the pandemic, in the form of lower oil prices.
BP stock slumped 5%, dragging the dominant sector and other oil majors lower. Royal Dutch Shell (LON:RDSa) fell 4%, ENI (MI:ENI) dropped 3% and Total (PA:TOTF) slipped 3.1%.
Prices had already been on course to open lower after China reported a new outbreak in Beijing’s Xinfadi wholesale food market over the weekend, prompting its closure as well as the locking down of nearby housing districts.
In Japan, Tokyo also reported Sunday its highest number of new cases in around a month, with the majority of cases traced back to recently re-opened nightclubs and bars.
This all followed a spike in cases in the United States, where more than 25,000 new cases were reported on Saturday.
Stock markets had benefited from a strong rally since late March, fueled by central bank and fiscal stimulus and optimism as countries gradually lifted their lockdown policies put in place to curb the spread of the virus.
Back in Europe, EU Commission President Ursula von der Leyen is set to meet with British Prime Minister Boris Johnson on Monday in a bid to revive stalled talks on post-Brexit ties. So far there hasn’t been much progress on a free-trade agreement and there’s not much time left to extend the end-2020 deadline for a deal.
In corporate news, easyJet (LON:EZJ) aircraft resumed flights Monday for the first time since March 30, beginning mainly with a small number of domestic U.K. flights after weeks of lockdown. Still, easyJet stock fell 2.7% amid these fears of a second wave of the coronavirus. Scandinavian airline SAS (CSE:SAS) stock rose 3.0% after the governments of Sweden and Denmark indicated they would support a $1.3 billion recapitalization plan. Local rival Norwegian Air Shuttle ASA (OL:NWC) fell 15%.
Movie theater operator Cineworld (LON:CINE) will also be in focus after it pulled out of its deal to buy Cineplex, a move that will ease concerns about its debt levels. Cineworld stock fell 1.2%, outperforming the wider market.
Oil prices slumped Monday, extending losses from last week, as new coronavirus infections hit China and the United States, potentially hitting the already fragile recovery in fuel demand.
The oil benchmarks fell about 8% last week, their first weekly declines since April.
At 3:45 AM ET, U.S. crude futures traded 3.9% lower at $34.83 a barrel. The international benchmark Brent contract fell 2.7% to $37.71.
Elsewhere, gold futures fell 0.7% to $1,725.25/oz, while EUR/USD traded at 1.1245, down 0.1%.