(Bloomberg) -- Investors are rushing to sell stocks most exposed to the energy crisis after Russia dealt a fresh blow by not resuming gas deliveries through the Nord Stream pipeline.
Gas prices surged more than 30% on Monday as traders reacted to Russia’s decision late Friday to keep its main gas pipeline shut indefinitely. Sectors most sensitive to a gas shock are bearing the brunt of the selloff, including industrials, chemicals, construction, automotive, energy and utilities.
Steelmaker Thyssenkrupp AG, car-parts manufacturer Valeo, chemicals firm BASF SE, cement maker Cie de Saint-Gobain and gas utility Uniper SE are among the worst performers in Europe on Monday. Germany’s DAX index, filled with corporate heavyweights from these sectors, is the biggest laggard among the region’s major benchmarks.
“Fears mount that European industries may have to scale back some production in the months to come,” said Susannah Streeter, a senior analyst at Hargreaves Lansdown Plc. The jump in gas prices “will add fuel to the fire of inflation and intensify the clamor for emergency government help,” she said.
Industrial output has already taken a hit, with the latest surge in power prices likely to force more manufacturers to reduce operations. Fertilizer makers Yara International ASA and Grupa Azoty SA have slashed production, while gauges of manufacturing in Europe and Asia fell last week.
The prospects of a prolonged cutoff from Russian gas supplies is pushing European governments toward emergency measures and energy rationing to protect companies and consumers from soaring costs. Energy ministers are set to discuss proposals to curb power prices when they hold an emergency meeting on Friday -- including gas-price caps and a suspension of power derivatives trading.
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Consumers are facing soaring energy bills on top of other inflation-driven cost increases, further denting discretionary spending. The Stoxx Europe 600’s retail and consumer products sub-indexes are also down sharply, with online clothing shop Zalando SE and meal-kit delivery firm HelloFresh SE sliding.
