Cuts by Opec+ ripple through global markets

Global stocks moved sharply lower on Monday following the Organisation of Petroleum Exporting Countries’ (Opec’s) surprise decision to cut production, adding to concerns that central banks may need to maintain their current cycle of interest rate hikes to cool inflation.

Sunday’s announcement pushed up global crude futures by as much as 6 per cent in trading, weighing heavily on transport and travel stocks. Meanwhile, soft US economic data further underlined the increasingly gloomy macroeconomic mood.

Dublin

After Friday’s modest 0.1 per cent gain, the Iseq index was off by 1 per cent on Monday, dragged lower by plunging tourism and travel stocks.

Ryanair, down more than 2.6 per cent to €14.49 per share, was among the highest profile victims in the airline space, which was down sharply across Europe. Traders in Dublin said the low-cost carrier’s decline happened despite it having “one of the better” fuel hedging strategies in the industry and was a function of both the sharp increase in global crude oil prices as well as a softening outlook for consumer sentiment.

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Irish ferries operator Irish Continental Group, meanwhile, was flat on the session despite having no fuel hedging strategy.

On the other hand the sharp spike in global crude prices pushed building materials giant CRH almost 0.7 per cent lower to €46.16 per share.

Bank of Ireland and AIB fell 2.9 per cent and 1.3 per cent to €9.05 and €3.69 respectively. Permanent TSB, meanwhile, was up more than 2.1 per cent to €2.36.

London

Pumped up by the Opec decision, shares in the oil majors helped propel the commodities-heavy FTSE 100 index up 0.5 per cent to a three-week gain, while the mid-cap FTSE 250 fell back by 0.25 per cent.

BP and Shell topped the table on the blue-chip index, both adding more than 4.1 per cent after Goldman Sachs lifted its forecast for Brent crude to $95 a barrel by the end of the year and to $100 for 2024 following the oil output change, which was announced on Sunday, a day before a virtual meeting of an OPEC+ ministerial panel including Saudi Arabia and Russia.

Cineworld, meanwhile, plunged close to 35 per cent towards its lowest levels since late August as the cinema operator said it has terminated the sale process for its US, UK and Ireland businesses and has reached a conditional deal with lenders to exit bankruptcy.

As part of a wider sectoral move shares in Aer Lingus-owner IAG fell 2.5 per cent, while Wizz Air tumbled by 4.8 per cent and EasyJet shed 1.2 per cent.

Europe

It was a muted start to the quarter for European stocks, with both the cross-continental Stoxx 600 and the blue-chip Stoxx 50 indices essentially flat on the session. The German Dax index, meanwhile, was down by around 0.3 per cent, while the French Cac 40 added 0.3 per cent.

Oil and gas shares were the top gainers, with the subindex rising 4 per cent, its best daily performance in over four months. Shares in French and Italian energy companies Totalenergies and Eni climbed 4.8 per cent and almost 4.1 per cent respectively, while German utility Uniper was up by almost 8.6 per cent and Tullow Oil added 6 per cent.

Unicredit was up 3 per cent as the bank started the first tranche of its share buyback programme on Monday of up to 2.34 billion euro ($2.53bn). Logistics firm DSV fell 4.8 per cent after a share placement.

UBS was down 2.9 per cent after Switzerland’s federal prosecutor opened an investigation into the state-backed takeover of Credit Suisse by UBS Group. Credit Suisse shed 2.4 per cent.

New York

The S&P 500 and the Nasdaq fell on Monday as rising oil prices rekindled concerns that the US Federal Reserve will stick to its rate-hike campaign for longer to temper inflation, while a slump in Tesla shares also pressured the benchmark index.

The electric car-maker shed 6.1 per cent on growing worries about its margins after aggressive price cuts led to only a modest increase in quarterly deliveries.

A 3.9 per cent gain in energy major Chevron on the jump in oil prices and a 3.6 per cent rise in UnitedHealth helped stem losses on the S&P 500 and assisted the price-weighted Dow Jones in outshining its peers.

Shares of other energy firms such as Exxon Mobil and Occidental Petroleum were also up 5.6 per cent and 4.2 per cent respectively. The energy sector climbed 4.4 per cent and was headed towards its steepest one-day gain in nearly a year. – Additional reporting: Bloomberg, Reuters