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European equity close: Weak day but well off the lows

Closing changes for the main European bourses:

  • UK FTSE 100 -1.2%
  • German DAX -1.55%
  • French CAC -1.3%
  • Spain IBEX -1.7%
  • Italy MIB -1.1%
If the break in the energy fever is real, then I think this candle is a good sign of a potential rebound in German equities. Intraday there was some nice dip buying after the gap down at the open and initial selling.
German DAX

Putin: Russia is prepared to help stabilise global energy market

Putin to the rescue

  • Russia is increasing gas exports to Europe
  • Russia is a dependable source of natural gas for Europe, Asia
  • Russia’s gas shipments to Europe might reach new highs

Energy prices are taking a plunge on the headlines as Russia steps in to help Europe with the energy crisis. Here’s a look at natty:

UK gas prices were quick to frontrun the announcement though, as they pared an advance of around 40% earlier to just 4% prior to the headlines crossing.
I reckon this will help to keep the calm in the market for a short while but we’ll see how things go once we get closer to winter. I don’t think the surge in energy prices is quite over yet and we’ll only get a better idea of that in the weeks ahead.
Oil is also dragged lower as a result with WTI now down 1% to around $78.

10-year Treasury yields push to highest since mid-June

10-year yields up 4 bps to 1.57%

USGG10YR

That is the highest since 17 June as bond sellers are starting to put up a display that they are still in the driver’s seat as we get things going in the new week.
For me, this is where things start to get interesting as the technical breakout from two weeks ago did flash signs that yields would be headed towards 1.60% or perhaps 1.70%.
Inflation expectations may be in part at play here with the energy crisis likely to worsen going into winter, especially in Europe and the UK.
Brent has pushed past $82 and WTI is clipping $79 already since yesterday and are also impacted by the surge in energy prices in general.
Going back to the bond market, the US non-farm payrolls this week is going to be a big one to watch out for. A strong report will rebuff Fed expectations of a taper and coupled with high inflation that we’re seeing, gives policymakers more flexibility in talking up rate hikes as a combative tool heading into next year.
For now, yields closing in on 1.60% may weigh more heavily on tech stocks so be wary of that and overall equities sentiment considering how things have been looking rather weary over the past few days – in spite of the gains posted yesterday.

Circa 450,000 tonnes of Australian coal has been unloaded in China

Coal shortages in China have resulted in a degree of capitulation.

China has been refusing to take Australian coal out of spite, not happy with Australia over various political matters. ANZ (overnight summary note) is noting however that the shortages of coal in China, which has resulted in electricity shortages and all of the associated costs to industry and keeping people warm, has prompted China to receive some coal. ANZ say a ‘handful’ of ships have been unloaded, circa 450k tonnes of coal.

Saudi Aramco has cut all but one November crude export price

The state oil firm has redcued all but one of its prices for November crude exports

All prices have been cut with the exception of US-bound cargoes of Arab Extra Light

Cuts to pricing for
  • the Asia-Pacific market (has reduced prices by 10-50¢/bl from October)
  • and into northwest Europe (cut by 50¢-$1/bl)
  • and others

SEC head Gensler says the US won’t ban cryptocurrencies

An ICYMI from a little earlier, Bloomberg with the article on remarks from Securities and Exchange Commission Chair Gary Gensler

Was speaking at a House hearing after a Republican lawmaker asked if a China-like prohibition was on the table in the US
  • says the US won’t follow China’s lead in banning digital tokens
  • US government’s focus is on ensuring that the industry adheres to investor and consumer protection rules, anti-money laundering regulations and tax laws
BTC gave it a like … adding to gains:
An ICYMI from a little earlier, Bloomberg with the article on remarks from Securities and Exchange Commission Chair Gary Gensler
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