A look at the day ahead in markets from Dhara Ranasinghe.
The biggest single pipeline carrying Russian gas to Germany starts annual maintenance on Monday with flows expected to stop for ten days. Markets fear the shutdown might be extended due to the war in Ukraine, raising recession risks for Europe.
Any extension in the shutdown would make it impossible to refill EU gas storage to its required levels for winter, meaning gas and electricity rationing may well start soon, according to analysts.
Energy-saving measures have already started in Europe’s powerhouse economy Germany. 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 lurched towards parity to the dollar. As early European trade gets under way, the single currency is down around 0.45% at $1.0140.
For many, it’s now a case of when not if the euro falls below the $1 mark, something that last happened 20 years ago.
Broad-based dollar strength meanwhile was evident across developed and emerging markets, with the Indian rupee weakening to a record low.
Global share markets are also weaker, with unease setting in ahead of Wednesday’s U.S. inflation data, which could trigger another super-sized rate hike from the Federal Reserve.
Both European stocks and Wall Street shares are expected to open lower, judging by trade in stock futures.
And in Asia, Macau shut all its casinos for the first time in more than two years, sending shares in gaming firms tumbling as authorities struggle to contain the worst coronavirus outbreak yet in the world’s biggest gambling hub.
Key developments that should provide more direction to markets
– Twitter hires U.S. law firm Wachtell to sue Musk after he pulls out of $44 bln deal – sources
– Japan PM Kishida set to consolidate ruling party power as Abe mourned
– Japan’s machinery orders fall for first time in 3 months
– New York President John Williams speaks
– US 3-year note auction
– US earnings: Pepsico Q2
(Reporting by Dhara Ranasinghe; editing by John Stonestreet)