onday should be a bad day for European stock markets. Investors are worried about the region’s economic risks, such as possible energy shortages, slowing growth, and rising inflation.
At 02:00 ET (06:00 GMT), the DAX futures contract in Germany was down 3.3%, the CAC 40 futures contract in France was down 0.5%, and the FTSE 100 futures contract in the U.K. was down 0.1%.
Russia said over the weekend that one of its main pipelines to Europe would stay closed indefinitely. The Nord Stream pipeline was supposed to start moving gas again on Saturday, but an oil leak in a turbine made that impossible.
Before flows were stopped last week for maintenance, the Nord Stream pipeline was already only using 20% of its capacity. This move is likely to make gas prices go even higher, and people in Europe may worry that they won’t have enough energy as winter approaches.
The rising cost of energy can only make inflation worse, which is already at record highs in the Eurozone and is quickly getting close to 10 percent.
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This puts pressure on the European Central Bank to act, and policymakers are planning to respond on Thursday with a second, big increase in interest rates, tightening things up before the economy gets worse.
Still, economic data that will be released later on the sector should show that economic activity in the Eurozone shrank even more in August. The S&P Global Composite PMI Index is expected to drop from 49.9 to 49.2.
Retail sales in the area could go up 0.4% from June to July, but this isn’t much of a comeback after they dropped 1.2% the month before. In July, the year-over-year change is expected to drop by 0.7%.
There was some good news overnight, as Chinese service sector activity expanded more than expected in August, with the Caixin services purchasing managers index coming in at 55, ahead of the expected 54 reading.
Aside from that, Foreign Minister Liz Truss is likely to be named the new U.K. Prime Minister later on Monday. She will have a lot on her plate right away, as the country is facing a crisis with the cost of living, labour unrest, and a long recession.
Oil prices went up on Monday before a meeting of the top oil producers. Traders were reacting to the idea that production might be cut to help the market.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, who make up a group called OPEC+, will meet later on Monday. Even though supplies are tight, it’s likely that production levels will stay the same.
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But Saudi Arabia, which is the de facto leader of the group, has been talking about cutting production to keep prices up. This possibility is helping the market.
After hitting multi-year highs in March, oil prices have gone down in the last three months. This is because people are worried that rising interest rates and COVID-19 restrictions in parts of China, the world’s biggest crude importer, could slow global economic growth and reduce oil demand.
By 2:00 ET, U.S. crude futures had gone up 1.9% to $88.55 per barrel, while the Brent contract went up 2.2% to $95.03 per barrel.
Gold futures also went up 0.1% to $1,724.10/oz, while EUR/USD went down 0.6% to 0.9887.
