by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected to open lower on Monday on fears over gas supplies to Europe after Russia’s decision not to restart the Nord Stream 1 gas pipeline, which led several countries in the bloc to announce contingency plans.
According to the first indications available, the Dax in Frankfurt should lose 3.3% at the opening and the FTSE 100 in London 1.1%. The EuroStoxx 50 index is expected to fall by 3.13%.
Russia announced Friday evening that the Nord Stream 1 gas pipeline, which supplies Europe via the Baltic Sea, would not restart as planned on Saturday, explaining that it detected an oil leak during maintenance operations in recent days.
Brussels considers, however, that this argument is a pretext and that Moscow has chosen to use gas as an economic weapon in retaliation for the sanctions linked to the war in Ukraine. France immediately announced that it would amortize “part of the increase in the price of electricity”, while Germany opted for an exceptional tax on energy companies with an anti-inflation plan of 65 billion euros. .
“Europe faces a catastrophic energy outlook and several companies have decided to cut production,” comments Tapas Strickland, economics manager at NAB.
Moscow’s decision raises fears of a further spike in energy prices and a possible recession in the Old Continent as the final S&P Global Services PMIs for August are due out on Monday.
Retail sales figures in the euro zone for the month of July will also be followed during the day by investors at the start of a week marked by the publication of several economic indicators and especially the monetary policy meeting of the Central Bank. European Union (ECB) on Thursday.
Money markets in Europe are pricing the likelihood of a three-quarter point ECB rate hike at more than 80% on Thursday. A rise of the same magnitude is expected in the United States for September 21 despite data from the monthly US employment report which on Friday suggested a slowdown in the labor market and an easing in wage growth.
AT WALL STREET
The markets are closed this Monday in the United States due to “Labor Day”.
The New York Stock Exchange ended lower on Friday as risks from news of an extended shutdown of the Nord Stream 1 gas pipeline took precedence over hopes that the US Federal Reserve (Fed) would slow its rally. rate following the publication of the monthly employment report.
The Dow Jones Industrial Average lost 1.07%, or 337.98 points, to 31,318.44 points. The broader S&P-500 fell 42.44 points, or 1.07%, to 3,924.41 points. The Nasdaq Composite fell for its part by 154.26 points (-1.31%) to 11,630.86 points.
IN ASIA
At the Tokyo Stock Exchange, the Nikkei index, down 0.06% to 27,633.51 points, varied little at about an hour from the close.
In China, the Shanghai SSE Composite rose 0.07%, while the CSI 300 lost 0.51%.
On the economic side, services activity in China slowed to 55.0 in August from 55.5 in July amid renewed COVID-19 outbreak, but business confidence has improved to a nine-month high, shows the private Caixin survey released on Monday.
RATE
The yield on two-year US Treasuries, which fell around 12 basis points on Friday following the release of the monthly US jobs report, was virtually flat on Monday, amid risk.
In Europe, the yield of the ten-year German Bund fell more than four points on Friday to 1.518% and that of the French OAT of the same maturity ended at 2.145%.
CHANGES
The dollar, up 0.61%, took advantage of its status as a safe haven asset to post a new 20-year high on Monday against a basket of benchmark currencies.
Against the Japanese currency, the greenback is still moving very close to its 24-year high, at 140.20 yen.
The euro is trading again below parity with the dollar at 0.9884 (-0.64%).
OIL
Oil prices are driven by the prospect of higher gas prices in Europe and pending the OPEC+ meeting on Monday on its production strategy.
According to sources, the oil organization could announce a slight reduction in its extractions or a status quo in its production.
Brent rose 2.13% to 95 dollars a barrel and American light crude (West Texas Intermediate, WTI) 2.03% to 88.63 dollars.
(Written by Claude Chendjou, edited by Tangi Salaün)
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