On Wednesday morning, European stock markets fell over inflation fears as US crude oil reached a seven-year high.
The FTSE 100 (FTSE) lost more than 1.2 percent after opening, trading below the crucial 7,000-point level in London, while the French CAC (FCHI) fell more than 1.3 percent and the DAX (GDAXI) fell almost 1.3 percent in Germany.
It occurred as US crude hit its highest level since 2014, extending a recent surge fuelled by limited supply, growing demand, and skyrocketing petrol costs. On Wednesday, European natural gas prices reached new highs.
A barrel of US oil was trading at $79.40, while Brent crude (BZ=F) reached a three-year high of $83 a barrel.
Meanwhile, German industrial orders fell 7.7 percent in August due to supply bottlenecks and shortages. After two months of significant increases, Europe's largest economy fell throughout the month, and the numbers were significantly worse than the 2.1 percent drop predicted by experts.
Car and auto-parts makers were the worst impacted, with orders down 13% from last month.
As trade opened in Europe, S&P 500 futures (ES=F) were down 0.7 percent, Dow futures (YM=F) were down 0.6 percent, and Nasdaq futures (NQ=F) were down 0.9 percent.
Overnight, Asian equities fell primarily due to increased oil costs and inflation fears.
In Tokyo, the Nikkei (N225) dropped more than 1%, extending losses for the ninth straight day, while the Hang Seng (HSI) lost 0.4 percent. Due to a holiday, the Shanghai Composite (000001.SS) will be closed until Friday.
Traders are afraid that the incoming Japanese Prime Minister, Fumio Kishida, intends to start laying out a redistribution plan involving increased taxes and, in particular the tax on capital gains.
In other news, the Bank of New Zealand raised interest rates for the first time in seven years in an effort to keep growing inflation in check. The Reserve Bank of New Zealand (RBNZ) raised its cash rate by a quarter-point to 0.5 percent.