Euro coins are immersed in water in this illustration taken May 23, 2022. REUTERS/Dado Ruvic/Illustration
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A look at the market day ahead by Dhara Ranasinghe.
The largest single pipeline carrying Russian gas to Germany begins annual maintenance on Monday, with flows expected to stop for ten days. Markets fear the shutdown could be extended due to the war in Ukraine, raising recession risks for Europe.
Any extension to the shutdown would make it impossible to refill EU gas stocks to the levels needed for the winter, meaning rationing of gas and electricity could start soon, analysts said.
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Energy-saving measures have already begun in Germany, which is Europe’s most powerful economy. Investors are now looking for more details on how policymakers plan to deal with potential energy shortages during the peak winter months.
And all this is not a great backdrop for the euro, which on Friday wobbled towards parity against the dollar. As early European trade began, the single currency was down about 0.45% at $1.0140.
For many, it is now a case of not if the euro falls below the $1 mark, something that last happened 20 years ago.
Meanwhile, broad-based dollar strength was evident in developed and emerging markets, with the Indian rupee weakening to a record low.
Global equity markets were also weaker, with concern ahead of Wednesday’s US inflation data that could trigger another huge rate hike by the Federal Reserve.
Both European stocks and Wall Street stocks are expected to open lower, judging by stock futures trading.
And in Asia, Macau closed all its casinos for the first time in more than two years, sending stakes into gambling firms as authorities scramble to contain the worst-ever coronavirus outbreak in the world’s biggest gambling hub. Read more
Key developments that should provide more guidance to the markets
on Monday:
– Twitter hires US law firm Wachtell to sue Musk after he pulls out of $44bn deal – sources read more
– Japan PM Kishida sets out to consolidate ruling party power as Abe mourns read more
– Japanese machinery orders fall for first time in 3 months read more
– New York City President John Williams speaks
– US 3-year note auction
– US earnings: Pepsico Q2
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Reporting by Dhara Ranasinghe; edited by John Stonestreet
Our standards: The Thomson Reuters Trust Principles.
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