Friday, December 02, 2022

Daily Brief: The ghost of the energy crisis deepens

Despite a lack of trading in the US and Canada, today’s session brought trading floors in Europe and considerable volatility in the energy commodities market.

In the Old Continent, the offer led today’s session, with the DAX losing 2.22%, the CAC40 1.2% and the EUR Stokes 50 losing 1.53%.

Data on the PMI for the services sector in Europe turned out to be quite mixed, mainly due to weakness in Germany and the accepted consensus in Spain:

  • Germany: 47.4 (Preliminary 48.2; Previous: 49.7)

  • France: 51.2 (initial: 51; previous: 53.7)

  • Italy: 50.5 (consensus: 48.2; anterior: 48.6)

  • Spain: 50.3 (consensus: 52.9; previous: 52.8)

  • EMU: 49.8 (Initial: 50.2; Prev: 51.2)

As we can see, slightly better readings in France and Italy were unable to offset weakness in Europe’s services sector. Industries in Europe are still doing well, but services could lead the way in a slowdown. Services and industry could behave very badly if the energy situation in Europe does not improve before the summer season begins

The sharp rise in energy prices has forced the German government to decide to introduce more transfer packages. According to a government spokesman, the new package could exceed 65,000 million euros and combine the previous two packages. We must remember that previous packages included, among other things, a reduction in taxes on fuel and the introduction of cheap tickets for public transport.

The new package, of orders worth at least €65 billion, is expected to join the previous ones of orders worth €30 billion. The new package will include, among other things:

  • Surcharge for pensioners on energy bills (single payment of 300 EUR)

  • Surcharge for students (single payment of the order of 200 EUR)

    1.5 billion euros will be used to subsidize transport tickets, which currently cost 9 euros per month.

Shares of Credit Suisse Bank (CSGN.CH), whose management is in talks to liquidate its investment banking division and move into private banking, fell over 3% today, according to media reports. According to media reports, the main issue is the liquidation of the IB unit in the US, which will put around 5,000 employees in danger.

The new leader of the Conservative Party and Prime Minister of the United Kingdom is Liz Truss, former Foreign Secretary.

The British Pound and the Australian Dollar are the best performing currencies of developed countries. The Japanese yen and the Canadian dollar are the worst performers.

The OPEC+ technical committee has recommended a production cut of 100,000 barrels per day in October. Remember in September the decision was made to go up to 100 thousand barrels per day, so we don’t really have any major changes. Also, OPEC+ is producing far below the production target anyway.

The Kremlin has announced that Russia will cut gas supplies until economic sanctions are lifted, leading to a more than 17% increase in TTF gas prices today. The situation is escalating and while some stocks have been replenished, the current supply disruption could prevent enough gas from being secured for the winter.

The crypto market was relatively calm today, with the largest projects in terms of capitalization nearing yesterday’s closing levels. BTC is still below $20,000.

Daily Brief: The Ghost Of The Energy Crisis Deepens

1 month ahead TTF gas prices reacted with a vigorous rally to Friday’s announcement that the NS1 had halted gas flow and today’s announcement that the Kremlin would continue to halt gas flows to Europe until ready until they are removed. Economic sanctions imposed on Russia. Source: Bloomberg

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