Rtl today – Market impact: European equities suffer from soaring gas prices, US default risk decreases
Wall Street stocks rallied on Wednesday as the near-term risk of a U.S. government default eased, although European stock markets slumped as soaring natural gas prices exacerbated concerns about the U.S. inflation.
US stocks appeared to be heading for another day of losses early in the session, amid inflation concerns and lingering political uncertainty in Washington.
After trading in the red for much of the session, stocks took a 180-degree turn after Senate Minority Leader Mitch McConnell announced that Republicans would allow Democrats to vote to temporarily lift the government. limit on the amount the US government can borrow.
McConnell’s offer pushes the issue until December, avoiding the risk of impending default and giving ruling Democrats time to work out a longer-term solution.
“For now, at least, this catastrophe of the day has just been put on the back burner,” said Art Hogan, chief strategist at National Securities.
Hogan said the market could be in line for more volatility in the coming weeks, with the Federal Reserve set to cut stimulus payments soon and investors worried about the next earnings season.
The Dow Jones Industrial Average ended up 0.3% at 34,416.99, more than 550 points above its session low.
– Concerns about gas –
Previously, European markets had fallen following a brief 25% jump in gas prices on the continent to record highs.
“Natural gas prices have reached new highs (…) as insufficient inventory levels ahead of the winter season raise fears of spike in inflation and energy prices for consumers,” the ‘AFP Walid Koudmani, XTB analyst.
“These supply constraints could translate into higher fuel costs during the winter months, a prospect that could further slow the economic recovery and worsen the mood in the markets.”
However, prices fell later on Wednesday when Russian President Vladimir Putin ordered state-controlled gas company Gazprom to maintain shipments through Ukraine.
Some critics have accused Moscow of intentionally limiting gas supplies to Europe in an attempt to speed up the launch of Nord Stream 2, a controversial gas pipeline connecting Russia to Germany.
“The news that Russia will be increasing gas supplies eased the nerves of the market a bit this afternoon and helped temper these record price hikes, but businesses are worried and so are investors,” Danni said. Hewson, financial analyst at AJ Bell.
At the same time, oil has skyrocketed after OPEC and other major producers this week chose not to increase production more than expected, despite tightening supply and recovering demand.
Soaring gas prices are expected to increase demand for crude, further frightening the markets.
“To put it in context, benchmark gas prices are trading at the equivalent of over $ 200 a barrel of oil,” said Stephen Brennock, PVM analyst.
“This should further encourage the switch from gas to oil and exacerbate the current supply deficit in the oil market.”
Oil prices retreated from multi-year highs following a larger than expected increase in crude inventories in the United States.
– Key figures around 2040 GMT –
New York – Dow: UP 0.3% to 34,416.99 (close)
New York – S&P 500: UP 0.4% to 4,363.55 (close)
New York – Nasdaq: Up 0.5% to 14,501.91 (close)
London – FTSE 100: DOWN 1.2% to 6,995.87 (close)
Frankfurt – DAX: DOWN 1.5% to 14,973.33 (close)
Paris – CAC 40: DOWN 1.3% to 6,493.12 (closing)
EURO STOXX 50: DOWN 1.3% to 4,012.65 (closing)
Tokyo – Nikkei 225: DOWN 1.1% to 27,528.87 (close)
Hong Kong – Hang Seng Index: DOWN 0.6% to 23,966.49 (close)
Shanghai – Composite: Closed for a public holiday
Euro / dollar: LOWER to $ 1.1562 from $ 1.1598 at 9:00 p.m. GMT Tuesday
Pound / dollar: DOWN to $ 1.3587 from $ 1.3629
Euro / pound: DROP to 85.07 against 85.10 pence
Dollar / yen: LOWER to 111.41 yen against 111.46 yen
North Sea Brent: DOWN 1.8% to $ 81.08 per barrel
West Texas Intermediate: DOWN 1.9% to $ 77.43 per barrel
strawberries-jmb / cs