June 7, 2023

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European stocks struggle for direction as oil and natural gas prices soar

European stocks struggle for direction as oil and natural gas prices soar

European shares on Wednesday struggled to set direction as Brent crude and natural gas prices rose in response to Russia intensify their attacks In the largest cities of Ukraine.

The regional Stoxx Europe 600 index turned between gains and losses in morning trading, after a sharp decline in the previous session, as investors weighed the possibility of the economic fallout from the crisis with the possibility of economic repercussions for central banks to reverse previous signals that they are about to withdraw from the pandemic. Cash support.

Hong Kong’s Hang Seng Index fell 1.8 percent, while futures that track the Wall Street Standard & Poor’s 500 Index rose 0.8 percent.

Brent crude, the international benchmark, rose 5.9 percent to $111 a barrel after US President Joe Biden announce Russia will be isolated from the world and hint at more economic sanctions in the future.

Meanwhile, natural gas prices in Europe are at an all-time high. Futures linked to TTF, the wholesale price of natural gas in Europe, rose more than 50 percent to 185 euros per megawatt-hour before paring its gains to trade at 146 euros.

The sanctions imposed by Western countries on Russia have so far sought to avoid the energy sector, but they have nonetheless led to volatility in global markets due to fears of supply disruptions.

“Brent crude is the biggest fear factor for stock markets,” said Martin Jeerdink, head of European equities at Dutch investment house NN Partners. “If you switch to ballistics and move about $150 or more per barrel, then [economic] Growth is really taking a beating.”

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But Ross Mayfield, investment analyst at Baird, said: “There is a sense of de-risking from the war, but that also could put the Fed and other central banks on a less aggressive tightening path.”

The yield on the German benchmark 10-year bond rose 0.03 percentage point to minus 0.04 per cent. follow this strong march For US, UK and Eurozone government bonds on Tuesday as derivatives markets began pricing at a much slower pace of monetary tightening by central banks, which had been expected to pull out of pandemic-era monetary support with a series of rate hikes.

The 10-year US Treasury yield rose 0.02 percentage points to 1.73 percent. That debt yield, which supports borrowing costs worldwide, fell by about 0.1 percentage point on Tuesday and returned to levels last seen in January before Federal Reserve Chairman Jay Powell prepared financial markets for a series of Aggression rate increases.

Oil’s recent gains, which have lifted Brent crude nearly 15 percent since President Vladimir Putin launched his invasion of Ukraine, came as Russia came. I stepped up the bombing One of the largest cities in its vicinity. Prices rose despite the United States and 30 other countries saying they would release 60 million barrels of their strategic reserves.

Biden has come under mounting pressure to ban Russian oil imports, with Republicans and Democrats calling on the US president to cut energy ties with the Kremlin. In his State of the Union address on Tuesday, Biden expressed support for punitive measures against Russia but stressed that controlling prices was his “top priority.”

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The Russian Central Bank said the Moscow Stock Exchange, which did not open for trading on Monday, will remain closed on Wednesday.