On Monday, European shares declined to their lowest level in over a month, due to a hawkish stance of the European Central Bank (EBC), concerns about reducing gas supplies from Russia, and a weak economic outlook.
The pan-European STOXX 600 index recorded a drop of 1.0% to reach its lowest level seen on July 28th. On Friday, Russian energy giant Gazprom announced that gas supplies to Europe will be halted for three days.
The supplies via the Nord Stream 1 gas pipeline will be halted for three days at the end of this month, which increases pressure on Europe as it tries to build up its supplies just ahead of the winter season.
There was a 7.7% drop in Uniper, which is the top importer of Russian gas in Germany, as it came close to a record low.
Meanwhile, there was a 4.4% drop in its parent company Fortum. There was also a 2.3% drop in the German DAX index, which saw it record its worst trading session in almost seven weeks.
The energy crisis in Europe appears to be getting worse. Supplies have already become strained due to the heatwave and winter disruptions could turn out to be devastating.
Euro zone data
On Tuesday, the flash purchasing manager index (PMI) data for the euro zone is due for release, as are the minutes of the previous meeting of the European Central Bank.
These will be released on Thursday and are expected to be hawkish. The ECB has no other choice but to continue increasing interest rates, even if a recession in Germany becomes likely.
This is because inflation is expected to remain on the high side in the next year as well. Currently, markets have priced in an interest rate hike of 60 basis points in September.
For the remainder of the year, a total interest rate hike of 130 basis points has been priced in. After they rallied almost 11% from lows in mid-June, European markets have dropped in recent days.
This is because investors have been worried about rising inflation and financial conditions worsening because of the global economic outlook.
There was a 0.8% drop in Credit Suisse, which saw it come down a fresh low. Dixit Joshi from Deutsche Bank was appointed as the chief financial officer of the Swiss lender.
In addition, it promoted Francesca McDonagh, the EMEA chief, to take the post of its chief operating officer.
There was also a 0.9% drop in Carrefour, as the French supermarket retailer said that it would freeze prices of almost 100 products in order to assist people dealing with rising inflation in the country.
There was also a 21.4% drop in the shares of Cineworld, as the second-largest cinema operator in the world confirmed that it would possibly file for Chapter 11 bankruptcy in the US.
Adidas also recorded a 5.2% drop, as the German sporting goods manufacturer announced that its CEO would step down next year.