European stock markets sank at the opening bell on Thursday, as investors worried about future economic growth after central banks aggressively tightened monetary policy to tackle rising inflation.
As of 15.34 hrs. local time in Thailand, the DAX in Germany traded 2% lower, the CAC 40 in France fell 1.5%, and the UK’s FTSE 100 dropped 1.4%. Meanwhile, pan-European Stoxx 600 dropped 1.3%.
The European Central Bank last week confirmed its intention to hike interest rates for the first time in more than 11 years by 25 basis points at the policy meeting next month, and it expects a further increase at the meeting in September. The ECB also lowered its growth projections.
Deutsche Bank stated in a report that “the deployment of the anti-fragmentation tools clears the pathway for policy rate liftoff and an accelerated tightening cycle.” This move opens the way for the ECB to implement three, 50-basis-point interest rate hikes this year.
In addition, European gas prices went up at Thursday’s opening as a result of Gazprom’s supply cuts to Italy and Germany.
The Dutch TTF futures contract for July rose further 11% to EUR130, extending gains by 20% on Wednesday, after the Russia’s state-owned natural gas monopoly has reduced deliveries through the Nord Stream 1 pipeline by 60% this week, blaming the delayed return of compressor station equipment following routine maintenance by its German manufacturer Siemens.