BOE's Carney says 'not yet the time' to hike interest rates
European stocks fell Tuesday, reversing gains as oil prices sank toward bear-market territory, taking energy-related shares with them.
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The Stoxx Europe 600 fell 0.4% to 390.32, retreating from gains logged Monday that left the index at its highest since June 5 (http://www.marketwatch.com/story/european-stocks-climb-with-french-market-higher-after-parliamentary-elections-2017-06-19). As the market turned lower, only the consumer goods and health care sectors held to gains.
Oil under pressure: The Stoxx Europe 600 Oil and Gas Index was shoved 2.3% lower, losing the most since September as West Texas Intermediate oil futures and Brent crude futures swung lower by about 3% (http://www.marketwatch.com/story/oil-hovers-at-seven-month-low-as-investors-weigh-up-supply-issues-2017-06-20). WTI prices, trading below $44 a barrel, are down roughly 20% from their most recent high (http://www.marketwatch.com/story/oil-hovers-at-seven-month-low-as-investors-weigh-up-supply-issues-2017-06-20), teetering around bear-market territory.
In the equipment and services group, Norwegian offshore engineer Subsea 7 SA (SUBC.OS) dropped 3.9% and Dutch oil-services provider SBM Offshore NV (SBMO.AE) fell 3.1%.
Among oil producers, Norway's Statoil ASA (STL.OS) was down 2.9% and Spain's Repsol SA (REPYY) gave up 1.9%.
Worries about oversupply in the global oil market persist even after the Organization of the Petroleum Exporting Countries and other major oil producers in May have agreed to keep curbing production into the first quarter of 2018.
"The assumption that extended OPEC supply cuts would underpin the oil price is unravelling by the day. We would expect U.S. crude to test $40 per barrel before any hopes of a sustainable recovery in oil prices," wrote London Capital Group senior analyst Jasper Lawler.
A weekly supply update is due late Tuesday from the American Petroleum Institute. Analysts surveyed by S&P Global Platts estimate U.S. oil inventories fell 2 million barrels last week.
U.K. rates on hold: European shares had been higher earlier in the session, aided in part by the prospect that borrowing rates in the U.K. are set to stay at a record low for the foreseeable future. BOE chief Carney on Tuesday said in his delayed Mansion House speech in London (http://www.marketwatch.com/story/boe-chief-carney-too-early-to-lift-interest-rates-2017-06-20) that "now is not yet the time" to begin to lift the bank's key interest rate from its current 0.25%.
"It would appear that the BOE chief wants to keep monetary policy loose as there is so much uncertainty surrounding the Brexit negotiations, which started yesterday," said David Madden, analyst at CMC Markets UK, in a note.
"Some traders feel that Mr. Carney was too aggressive in his easing of monetary policy in the awake of Brexit, and now it seems that he doesn't want to increase interest rates in case he has to cut them again."
Read Brett Arends: Brexit threatens to become a fiasco -- and investors are in denial (http://www.marketwatch.com/story/brexit-threatens-to-become-a-fiasco-and-investors-are-in-denial-2017-06-19)
And check out:Forget Trump and Brexit -- this is what elite fund managers are watching (http://www.marketwatch.com/story/this-is-what-elite-fund-managers-are-watching-closely-and-its-not-trump-or-brexit-2017-06-19) (http://www.marketwatch.com/story/brexit-threatens-to-become-a-fiasco-and-investors-are-in-denial-2017-06-19)
Carney's remarks had earlier helped pull the U.K.'s FTSE 100 out of the red (http://www.marketwatch.com/story/ftse-100-flips-higher-as-central-bank-boss-wants-rates-held-steady-2017-06-20) as the British pound fell below $1.27 (http://www.marketwatch.com/story/pound-slides-to-1-week-low-after-boes-carney-dashes-hopes-of-a-rate-hike-2017-06-20). But the selloff in oil prices drove that benchmark down as well, losing 0.4% at 7,542.55.
Stock movers: Barclays PLC (BCS) (BCS) fell 1.4% after the U.K. Serious Fraud Office charged the bank and four former executives with conspiracy to commit fraud (http://www.marketwatch.com/story/barclays-4-former-top-execs-charged-with-fraud-2017-06-20) in a case related to fundraising in Qatar during the financial crisis.
Shares of German lighting manufacturer Osram Licht AG (OSR.XE) marched up 3.5%, to top the Stoxx 600. The move came after a ratings upgrade to buy at Bankhaus Lampe, according to Dow Jones Newswires.
Indexes: Germany's DAX 30 fell 0.3% to 12,853.16, backing away from Monday's record close. France's CAC 40 turned fractionally lower to 5,309.24. Spain's IBEX 35 was off 0.6% at 10,783.10.
Economic data: The eurozone's current account surplus narrowed to 22.2 billion euros in April (http://www.marketwatch.com/story/eurozone-current-account-surplus-narrows-2017-06-20).
(END) Dow Jones Newswires
June 20, 2017 11:12 ET (15:12 GMT)