European Stocks Tumble As Virus Concerns Trigger Sell-off

European stocks tumbled on Monday, extending recent losses, weighed down by mounting concerns about the rapidly surging delta variant of the coronavirus in several countries across Europe and Asia.

The virus has spread rapidly in the U.S. as well, and several countries in Europe have imposed fresh restrictions to curb the spread of the variant.

The British government has lifted most pandemic related restrictions effective today, but traders stayed wary of picking up stocks even at lower levels.

The pan European Stoxx declined 2.3%. The U.K.’s FTSE 100 ended 2.34% down, Germany’s DAX closed lower by 2.62% and France’s CAC 40 drifted down 2.54%, while Switzerland’s SMI lost 1.37%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Russia, Spain and Turkey all ended notably lower, with most of the benchmarks falling 2 to 3.5%.

Travel and leisure stocks bore the brunt of the selling pressure. Energy stocks fell as crude oil prices extended losses amid oversupply concerns and weak outlook for energy demand.

In the UK market, ITV, Rolls-Royce Holdings, IAG, St. James Palace, Lloyds Banking Group, BP, BT Group, Royal Dutch Shell, Pershing Square Holdings, Glencore, Associate British Foods, Melrose and Prudential lost 4 to 7%.

Natwest Group, Anglo American Plc, Aviva, Barclays Group, CRH, Standard Chartered, British American Tobacco and BHP Group also declined sharply.

Just four stocks out of the FTSE 100 index closed on the positive side. Just Eat Takeaway rallied 3.25% and Pearson gained 1.3%, while B&M European Value Retail and Hikma closed modestly higher.

In the French market, most of the CAC 40 components ended sharply lower. Unibail Rodamco closed more than 7% down, Airbus shed about 6%, Technip, Safran, Publicis Groupe, BNP Paribas, Societe Generale, Renault, Vinci, Atos, ArcelorMittal, Accor and Air France-KLM lost 3.7 to 5.2%.

Credit Agricole, Saint Gobain, Carrefour, STMicroElectronics and Sodexo also declined sharply.

In Germany, MTU Aero Engines, Munich RE, Deutsche Telekom, Thyssenkrupp, BASF, Covestro, RWE, Lufthansa, BMW, Daimler, Bayer Allianz, Deutsche Bank, HeidelbergCement and Infineon Technologies shed 3 to 6%.

In economic news, UK house prices increased to a new record high for the fourth straight month in July largely driven by the shortfall of property coming for sale, data from property website Rightmove said on Monday.

House prices increased 5.7% on a yearly basis in July, but slower than the 7.5% increase logged in June.

Month-on-month, house prices gained 0.7%, following a 0.8% rise in June. The latest monthly growth was the largest at this time of year since July 2007.

Eurozone construction output grew in May after falling in April, led by building construction, preliminary data from Eurostat showed Monday.

Construction output rose 0.9% from the previous month, when it fell 0.4%. In March, output rose 4%.

Building construction rose 1.2% on a monthly basis, while civil engineering continued to fall, down 0.3%.

In the EU, the construction output increased 0.7% monthly after a 0.1% fall in the previous month.

In May, building activity rose 0.9%, while civil engineering work shrunk 0.1%.

On a year-on-year basis, the euro area construction output grew 13.6% after a 45.2% surge in the previous month.

In the EU, the construction output grew 11.6% yearly, after a 35.4% rise in April.

Bank of England Policymaker Jonathan Haskel said the tightening of monetary policy is not the right choice for the foreseeable future.

“In the immediate term, the risk of a pre-emptive monetary tightening curtailing the recovery continues to outweigh the risk of a temporary period of above-target inflation,” he said in an online webinar on Monday.

“For the foreseeable future, in my view, tight policy isn’t the right policy,” said Haskel.

Meanwhile, on the crude oil front, the OPEC cartel and partners such as Russia agreed on Sunday to boost supply from August, ending a two-week spat between Saudi Arabia and the United Arab Emirates.

The cartel will boost output by 400,000 barrels a day each month from August, continuing until all of its halted output has been revived.

The agreement also reveals baseline increases for four of OPEC’s member states and one non-OPEC state beginning in May of 2022.

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