The Paris Stock Exchange fell sharply, erasing at the same time its rebound on Friday. The trend is weighed down by the risk of an energy crisis in Europe, fueled by the postponement sine die the resumption of Russian gas deliveries via the Nord Stream 1 gas pipeline. Futures contracts on the Dutch TTF, a benchmark for gas prices in Europe, soared 30% to 278.50 euros per megawatt hour, thus approaching the peak history reached more than 340 euros a little less than two weeks ago.
Mid-session, the Bedroom 40 fell by 1.54% to 6,072.25 points in a business volume of 820 million euros. Elsewhere in Europe, the Dax of the Frankfurt Stock Exchange fell by 2.30%.
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. »
OPEC+ member countries are also due to meet on Monday to decide on their production levels for the month of October. Saudi Arabia has indicated that it may reduce its pumping. The barrel of Brent from the North Sea is up 2.6% to 95.46 dollars. TotalEnergies earns 1.5% and Vallourec 1.8%. Conversely, the automotive sector is particularly weak. Faurecia down 6.5%, Valeo by 7.3%, while containment measures were imposed in Shenzhen, where the two groups have R&D centers, while health restriction measures were extended in Chengdu, which is highly industrial. Renault and Stellantis down by 4%.
The euro below 0.99 dollars
The rise in prices is amplified by the weakness of the euro, which briefly fell below 0.99 dollars for the first time since 2002. The drop in the European currency was triggered by Moscow’s decision to cut off gas at Europe in reaction to the decision of the G7 Finance Ministers to cap Russian oil prices from December in order to reduce Russia’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, at a time when the surge in prices at consumption makes a 75 basis point rise in rates by the European Central Bank, which will announce its monetary decision on Thursday, almost inevitable.
US markets are closed on Monday for Labor Day. It is also today that members of the British Conservative Party must appoint Boris Johnson’s successor as party leader, and therefore Prime Minister. Foreign Minister Liz Truss is the favorite against former finance minister Rishi Sunak.