The Paris Stock Exchange is moving above its lows for the day after erasing its rebound from Friday in early trading. The euro is hovering around its lowest levels for 20 years, weighed down by the risk of an energy crisis in Europe, itself fueled by the postponement sine die the resumption of Russian gas deliveries via the Nord Stream 1 gas pipeline, initially scheduled for Saturday. Futures contracts on the Dutch TTF, a benchmark for gas prices in Europe, soared 31% to 278.50 euros per megawatt hour this morning, their biggest rise since March, thus approaching the historic peak reached at more of 340 euros a little less than two weeks ago.
Around 4 p.m., the Bedroom 40 fell 1.26% to 6,089.90 points, after a low of 6,018.02 (-2.42%), in a business volume of 1.33 billion euros. Elsewhere in Europe, the Dax of the Frankfurt Stock Exchange fell by 2.19%. US markets are closed on Monday for Labor Day, a public holiday in the United States.
Contraction in services in the euro zone
The market also digests the decline in activity in services in the euro zone last month, the PMI index established by S&P Global falling by 1.4 points to 49.8, its lowest level for 17 months. A figure below 50 reflects a contraction in activity. Chris Williamson, Chief Economist of S&P Global, notes that: “ Testifying to the continuing very strong inflationary pressures in the region, the prices paid and invoiced by companies continue to increase at rates never reached before the pandemic. The decline in inflation rates continued in August, however, suggesting that they may have plateaued. »
The euro briefly fell below $0.99 on Monday for the first time since 2002. The drop in the European currency follows Moscow’s decision to cut off gas to Europe in response to the proposal of the G7 finance ministers to cap Russian oil prices from December to reduce Moscow’s ability to finance its war in Ukraine.
The intensification of the energy crisis with the approach of winter is weakening the economies of the euro zone, prompting several countries, including Germany, to adopt new anti-inflation measures. “Economies have braced themselves for energy constraints and the prospect of rationing, but it is clear that compared to expectations at the start of the year, the current development looks like the worst of developments.summarizes Wei Li, strategist at BlackRock, on Bloomberg TV. So, as we head into the end of the year, underweighting equities in such an environment seems appropriate. “, he adds. In addition, this crisis comes at a time when the surge in consumer prices makes a 75 basis point rise in rates by the European Central Bank almost inevitable on Thursday, despite the deterioration in the economic outlook.
Liz Truss will succeed Boris Johnson
Meeting by videoconference on Monday, the OPEC + ministerial monitoring committee also recommended a reduction in its production target of 100,000 barrels per day from October, according to delegates quoted by Bloomberg and Reuters. The barrel of Brent from the North Sea is up 3.9% to 96.65 dollars. TotalEnergies gains 3.6% and Vallourec 2.1%. Conversely, the automotive sector is particularly weak. Faurecia and Valeo fell by around 7%, while containment measures were imposed in Shenzhen, where the two groups have R&D centers, while health restriction measures were extended in the industrial hub of Chengdu. Renault and Stellantis fall for their part by more than 4%.
In the United Kingdom, Foreign Secretary Liz Truss won the ballot organized by the Conservative Party to appoint Boris Johnson’s successor as leader of the party, and therefore as Prime Minister. She is ahead of her rival and former finance minister Rishi Sunak with 81,326 votes, against 60,399. Liz Truss will travel to Balmoral Castle on Tuesday to meet the Queen there before returning to London to present her government. Boris Johnson will deliver a farewell speech from Downing Street tomorrow morning.