European shares close lower as oil surges
The pan-European Stoxx 600 dropped 0.65% to 602.64
European shares closed lower on Wednesday as oil prices surged, raising concerns about renewed inflationary pressure.
The pan-European Stoxx 600 dropped 0.65% to 602.64.
Germany’s DAX shed 0.31% to 23,943.74, France’s CAC 40 declined 0.48%, and London’s FTSE 100 slipped 1.16% to 10,213.11.
In commodities, Brent crude futures were last up 5.84% on ICE at $117.76 per barrel, while the NYMEX quote for West Texas Intermediate added 5.75% to $105.68.
The $110 per barrel alarm bell is increasingly ringing in the heads of investors and has put global markets under renewed pressure, said Danni Hewson, head of financial analysis at AJ Bell.
Chris Beauchamp, chief market analyst at IG, said: Oil’s sojourn below $100 didn’t last long, and it was never going to while the Straits of Hormuz remain closed.
Now, with the blockade expected to roll on for weeks the oil market is once again reflecting the growing panic around the globe, he said.
Investors were also weighing news that the UAE plans to leave OPEC and OPEC+ from 1 May.
On the economic front, decisions from the Bank of England and the European Central Bank were due on Thursday.
The nervousness in markets is palpable. So much rides on the next 24 hours or so, thanks to the Fed meeting and the tech giants, Beauchamp said.
Earnings growth has been the one thing keeping markets from completely losing it about the surge in oil prices, so it is up to the heavyweights tonight to deliver the goods in terms of earnings growth and a solid outlook, he said.
German inflation increased to its highest level in 27 months in April, as energy prices jumped on supply disruptions linked to the Middle East war.
Consumer price inflation rose to 2.9% from 2.7% in March, according to the Federal Statistical Office, below economists’ expectations for 3.0% but the highest rate since January 2024.
Core inflation, excluding food and energy, eased to 2.3% from 2.5%, its lowest level since June 2021.
Energy prices increased 10.1% year-on-year after a 7.2% rise in March, while food inflation accelerated to 1.2% from 0.9%.