European Markets Turned Mixed After Surprise OPEC+ Production Cut

Bridgette Randall
03 Apr, 2023
Frankfurt

European markets traded lower after inflation worries resurfaced following a surprise production cut by 8 member nations linked to OPEC+. 

The surprise production cut is expected to be in force from May 1 and last till the end of the year. 

Saudi Arabia led the voluntary production cuts with 500,000 barrels per day. 

Iraq said it plans to cut its production by 211,000, UAE by 144,000, Kuwait by 128,000, Kazakhstan by 78,000,  Algeria by 48,000, Oman by 40,000 and Gabon by 8,000. 

The Sunday's product cuts are in addition to Russia's 500,000 barrels per day cut announced in February. 

Collectively, these production cuts will remove about 1.66 million barrels per day from the world markets in addition to 2 million barrels per day cuts announced at the previous OPEC+ meeting in October 2022.  

The latest oil production cut complicates the complex calculation of inflation and interest rates and is likely to dash hopes of rate-pause by some investors. 

Asian markets were on the defensive as well after China's manufacturing growth stalled in  March but India's manufacturing advanced to a 3-month peak.  

 

Swiss Inflation Weakened In March 

The annual inflation rate in Switzerland weakened to 2.9% in March from 3.4% February, the Swiss Federal Statistics Office reported Monday. 

The annual inflation rate was the lowest since June 2022 after the prices of food, beverages and housing and energy rose at a slower pace. 

Core inflation, which excludes food and energy, rose 2.2% in March, slower than 2.4% in February. 

On a monthly basis, consumer prices rose 0.2% in March slower than 0.7% in February. 

Separately, Portugal's inflation eased in March after energy prices rose at a slower pace, the Statistics Portugal said Friday. 

Consumer prices inflation eased to 7.4% in March from 8.2% in February and core inflation eased to 7.0% from 7.2% respectively. 

 

Europe Indexes & Yields 

The DAX index increased 0.17% to 15,655.14, the CAC-40 index added 0.5% to 7,361.75 and the FTSE 100 index rose 0.7% to 7,685.56. 

The yield on 10-year German Bunds rose to 2.35%, French bonds advanced to 2.85%, the UK gilts to 3.55% and Italian bonds to increased to 4.17%. 

The euro inched higher to $1.08, the British pound advanced to $1.23 and the Swiss franc to 91.75 cents. 

Brent crude oil increased 4.4% or $5.55 to $84.39 a barrel and the Dutch TTF natural gas futures increased 56 cents to Є48.40  per MWh.  

 

Europe Stock Movers 

TotalEnergies SE increased 4.4% to €56.60, BP Plc advanced  4.03% to 531.40 and Shell PLC added 3.9% to €27.51. 

Banks were in focus after inflation worries resurfaced. 

UBS Group AG declined 1.5% to Sfr 19.0, Deutsche Bank increased 2.3% to €9.57 and HSBC Holdings Plc increased 2.2% to 561.70 pence. UniCredit SpA advanced 2.3% to €17.83.