China's Covid Protests Weigh On Investor Sentiment, Send European Stocks Lower

The pan-European STOXX 600 index slipped 0.5 per cent, tracking a sharp decline in Asian stocks

European oil stocks tumbled 1.9 per cent as crude prices, shed almost 3 per cent on worries about the outlook for the world's biggest crude importer, while miners fell 1.4 per cent on the back of sliding metal prices. ( Image Source :Getty )

Shares of European firms, led by losses in energy and mining stocks, declined from three-month highs on Monday because of widespread and rare protests in China against stringent Covid curbs that sparked a wave of selling in global markets.

According to Reuters, the pan-European STOXX 600 index slipped 0.5 per cent, tracking a sharp decline in Asian stocks.

China logged record-high Covid-19 infections on Monday, after a weekend of protests, raising worries about the management of the country's zero-Covid policy and its impact on the world's second-largest economy.

Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note to clients, “A widening of infections could add to supply chain interruptions, with China's problems spilling into global markets. Social discontent related to zero-Covid adds to execution and implementation risks for the government. We do not expect economic or market headwinds in China to abate significantly over the coming months.”

As reported by Reuters, European oil stocks tumbled 1.9 per cent as crude prices, shed almost 3 per cent on worries about the outlook for the world's biggest crude importer, while miners fell 1.4 per cent on the back of sliding metal prices.

Other European sectors exposed to China, including automakers and luxury, also fell in morning trade. The benchmark STOXX 600 notched its sixth consecutive weekly gain on Friday, marking a recovery of about 15 per cent from its September lows on hopes that the Federal Reserve will shift to smaller interest rate hike amid signs of cooling US economy.

US jobs data later this week might shift expectations around the Fed's policy move in December, with traders currently anticipating a 50-basis-point rate hike.

Preliminary reading of euro zone inflation for November is due on Wednesday, with the numbers expected to show a slight cooling from the record levels hit in October.

European Central Bank Chief Christine Lagarde will testify before the European parliament later in the day.

Credit Suisse's shares slipped 4 per cent to a record low. The head of its Swiss unit said, "Some customers have withdrawn some of their money, but very few have actually closed their accounts.”