By Steve Goldstein, MarketWatch
European stock markets fell on Monday as traders reacted to the news of the attack that took half of Saudi Arabia’s oil output offline, sending oil producers much higher while airlines struggled.
The broader Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.32% fell 0.63% to 389.31 in a move that masked a major split.
Majors like BP /zigman2/quotes/202286639/delayed UK:BP -0.66% /zigman2/quotes/207305210/composite BP -0.74% and Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -0.82% /zigman2/quotes/205095589/composite RDS.A -0.76% rallied as explorers including Aker BP /zigman2/quotes/210393113/delayed NO:AKERBP -0.77% surged.
Airlines including Air France-KLM /zigman2/quotes/205396176/delayed FR:AF -0.24% that are sensitive to jet fuel costs tumbled, as did cruise operator Carnival /zigman2/quotes/210414141/delayed UK:CCL -0.55% /zigman2/quotes/200877079/composite CUK +0.23% . Banks that have rallied of late also dropped, with Deutsche Bank /zigman2/quotes/205584254/delayed DE:DBK -0.82% and Commerzbank /zigman2/quotes/200193353/delayed DE:CBK +0.15% lower.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.17% weakened 0.65% to 12387.81, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.65% fell 0.78% to 5611.15 and the U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.44% fell 0.36% to 7341.03.
Oil prices were off the day’s highs but still strong, with Brent crude oil futures /zigman2/quotes/209704782/delayed UK:BRN00 -0.30% up over $5 a barrel, a gain of about 9%.
“To take out over 5% of global supply (in the country with the bulk of ‘spare capacity’) in a single strike - a volume exceeding cumulative non-OPEC supply growth over 2014-2018 - is highly worrying,” said Jon Rigby, an analyst at UBS.
“While U.S.-China trade and U.S. oil supply growth have been the primary price drivers we see a return of the political risk premium as the market has been arguably complacent about risk events,” he said, adding its upside scenario would see oil getting to $80.
U.S. stock futures /zigman2/quotes/209948968/delayed ES00 +0.17% were weaker as well, while the yield on the 10-year /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.35% fell 4 basis points to 1.86%.
Outside of the big oil news, H&M shares /zigman2/quotes/208522175/delayed SE:HM.B +0.63% fell 1.9% after climbing over 50% over the last 12 months. The Swedish chain reported a 12% rise in third-quarter sales and said it had well-receiver summer collections and increased market share.