(New York) Western stock markets continued their decline on Monday under the weight of the risks of recession linked to the price of gas in Europe, which also caused the euro to fall, and pending a new firm message from the president of the US central bank (Fed).
Updated yesterday at 5:26 p.m.
European indices fell by 1.80% in Paris and 2.32% in Frankfurt, weighed down by the energy crisis which threatens to plunge Europe into recession. Milan lost 1.64%, London only 0.22%.
On Wall Street, the Dow Jones fell 1.91%, the NASDAQ index, 2.55%, and the broader S&P 500 index, 2.14%.
“Europe is preparing for another closure of the Nord Stream 1 pipeline later this month,” Oanda analyst Craig Erlam told AFP.
Gas giant Gazprom has warned that gas supplies will be cut for “maintenance” from August 31 to September 2, risking renewed fear of a shortage in Europe, where Russia is accused of energy blackmail.
As a result, the price of European gas (Dutch TTF futures contract, benchmark for the European natural gas market) soared again and reached 295 euros per megawatt hour (MWh) on Monday, approaching historic session records reached in the early days of Russia’s invasion of Ukraine.
In this nervous market, investors fell back on the dollar, considered a safe haven.
The euro sank below parity with the greenback, to a level not seen since the year it came into circulation. The European currency lost 0.95% around 9 p.m. GMT to 0.9942 dollars, its lowest since 2002.
“Global inflation and interest rate concerns have once again caught up with market participants,” said independent analyst Timo Emden.
Until last week, investors supported the market, hoping that the US Federal Reserve, which has already raised rates four times since March, would be less aggressive in its next rate hike, which is expected to come in September.
But as inflation continues to rage, reduces the purchasing power of individuals and puts many companies in difficulty, central banks remain focused on the need to curb the rise in prices, even if it means posing a risk of recession.
Thus, investors are nervously awaiting the annual meeting of central banks in Jackson Hole in the United States, under the leadership of the Fed, which will be held on Thursday and Friday.
“This is an opportunity for the Fed to send a clear message to the markets,” namely that the institution “is still focused on inflation rather than economic risks,” said Andy Kapyrin of Regent Atlantic.
The US 10-year bond rate rose above 3% for the first time in a month.
German energy is suffocating
Under the pressure of gas prices, several German energy companies spent a session in the fog: Siemens Energy lost 4.37%, E. ON (-2.98%) and Uniper fell 7.72 %.
The boss of Adidas on the departure
The German sports equipment giant Adidas (-6.14% to 156.09 euros) announced on Monday the departure “during 2023” of its boss Kasper Rorsted, who will remain in his post “until a successor be appointed” to ensure a “smooth transition”.
Oil and cryptos falter
The barrel of Brent from the North Sea, the benchmark for crude in Europe, for delivery in October fell only 0.24%, to close at 96.48 dollars. Its American equivalent, the West Texas Intermediate (WTI), for delivery in September, lost 0.59% to 90.23 dollars a barrel.
Bitcoin lost 2.32% to $21,108.