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European stocks fell at the opening Monday morning in London following news of a tightening energy market in Europe and large losses in Asia as investors fled real estate stocks.
The FTSE 100 (^ FTSE) was 1.6% lower by mid-morning in London. The German DAX (^ GDAXI) and the French CAC (^ FCHI) both fell around 2.3%.
UK investors were monitoring movements in the UK energy market as the government plans to offer state-guaranteed emergency loans to businesses as wholesale gas prices soar. Prices have jumped 250% since January.
“The FTSE 100 starts a new week the same as if it had ended the previous one, as the index falls firmly below 7,000 to its lowest level since July, dragged down by the mining sector,” AJ Bell said. Director of Investments Russ Mold.
“The market has cause for concern and those who claim the markets looked frothy see some of that froth disappear as the brewing crisis in China, soaring gas prices in Europe and concerns about stagflation combine to bring down inventory. “
Shares had fallen in Hong Kong in the previous session, with the Hang Seng (^ HSI) closing 3.6% lower. The nervousness reverberated around the world as shares of Chinese real estate company Evergrande (3333.HK) plunged more than 17% at one point, closing the day down 12.2%.
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Commodities were also sold off heavily this morning after Chinese Premier Li said at the weekend that China would use “market tools” to stabilize commodity prices.
Copper, aluminum, platinum and palladium futures were all trading lower.
Hang Seng worries spilled over to futures on Wall Street, as the S&P 500 (ES = F) appeared to open down 0.9%, the Dow (YM = F) appeared poised for declines of 1 , 2% and futures on the Nasdaq (NQ = F) were down 0.7%.
The S&P 500 had already fallen below its 50-day moving average on Friday, a significant point of resistance for the index.
“Equity traders are currently following a buy-down strategy. This was evident in the drop in the S&P 500 index on Wednesday, when the Americans injected $ 46 billion (£ 33.6 billion) in equity funds, ”said Naeem Aslam, chief market analyst at AvaTrade.
“This is the largest influx of investment since March, with a total of $ 28 billion injected into large-cap companies.”
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Traders look to the Federal Reserve’s open market committee meeting later this week and a series of other central bank meetings.
“The FOMC meeting, due to take place on Wednesday, is the most important event for investors this week,” Aslam said. “Stock market participants will be looking for clues on a possible timeline for the inevitable decline in bond purchases.”
The Bank of England, the Bank of Japan and the Swiss National Bank are also due to meet.
Watch: Does Evergrande pose broader market threats outside of China?
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