Euro hits 20-year low, sterling fell, gas price jumped as markets in Russia disrupted by pipeline closures – Business Live | Business

Introduction: the euro fell to its lowest level in two decades after the shutdown of the gas pipeline

Good morning, and welcome to our renewed coverage of business, the global economy, and financial markets.

Financial markets are shaken by the shutdown of Russia’s Nord Stream 1 pipeline, with the energy pressure on European economies intensifying as winter approaches.

The euro fell to a two-decade low in early trading this morning, after major Russian energy company Gazprom Extended shutdown of gas pipeline to Germany on Friday evening.

FX: #EURO slides to the lowest level in two decades against USD: 0.9891, chart @BloombergTV pic.twitter.com/qxNm6ZpMt8

— ACEMAXX ANALYTICS (@acemaxx) September 5, 2022

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Concerns about rising energy prices, and possible shortages, pushed the euro below parity against the US dollar. Sending the single currency to a low of $0.9879 against the US dollar for the first time in two decades.

#CNBCTV18Alert | Euro declines below 99 US Cents for the 1st time in two decades pic.twitter.com/acF37e4aAo

— CNBC-TV18 (@CNBCTV18Live) September 5, 2022

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Nord Stream 1 was due to resume operations on Saturday morning, after a three-day hiatus for maintenance. But Gazprom dashed hopes of its appeal on Friday night, blaming a leak.

Russia’s gas supply routes to Europe

Analysts expect gas prices to rise, having pulled back from recent highs last week.

Michael Hewson of CMC Markets explains:

Russia’s actions on Friday to shut down the pipeline indefinitely could see renewed upward pressure on natural gas prices in Europe and the UK when markets reopen today, after they saw huge price drops last week as UK natural gas prices fell 39% European prices fell by 33%.

European stock markets head for sharp losses at the open, with German stocks Dax Down 2-3% in the futures market.

Good morning from Europe where Europe is in risk-off mode after Russia cut off NS1 flows
– DAX / FTSE MIB/ CAC 40 futures seen 2-3% lower
– EUR at 0.9882 -0.6% ($GBP also plunging to new post pandemic lows of $1.1448)

— Joumanna Bercetche 🇱🇧 (@CNBCJou) September 5, 2022

\n”,”url”:”https://twitter.com/CNBCJou/status/1566669791393464320″,”id”:”1566669791393464320″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”4bdcc530-dbff-40a6-82b7-874ae7c6cb04″}}”>

Good morning from Europe Europe is in no-risk mode after Russia cut off NS1 flows
– DAX/FTSE MIB/CAC 40 futures witnessed a 2-3% decline
– Euro at 0.9882 -0.6% (GBP also fell to new post-pandemic lows at $1.1448)

– Jomana Persic 🇱🇧 (@CNBCJou) 5 September 2022

As the day comes.

The OPEC group and its allies meet to set production targets for October today. They are likely to leave production prices unchanged, although they may consider a small production cut to support oil prices.

The latest services sector PMI reports will show how companies in the UK and the Eurozone performed last month.

UK car sales are expected to rise slightly in August, according to monthly data from SMMT.

schedule of work

  • 9am GMT: UK new car sales for August

  • 9 am GMT: Eurozone Services PMI for August

  • 9:30 am GMT: UK Services PMI for August

  • 10am GMT: Eurozone retail sales for July

  • noon GMT: the OPEC + meeting begins

The British wholesale gas contract for immediate delivery has jumped 20%, to 360p per therm.

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Winter gas prices are rising too – which will bring even more pain to businesses and consumers if they remain at these levels (or rise even higher).

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The wholesale UK gas contract for November has jumped 27% to 660p per therm, while the December contract has risen 12% to 740p per therm. Both are near last month’s record highs.

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The day-ahead wholesale UK gas price has more than doubled this morning, as prices surged back towards this year’s record highs.

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Gas for delivery tomorrow has surged by 140% to 360p per therm, after Russia’s decision to shut the Nord Stream 1 pipeline intensified the energy crisis facing Europe.

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That more than wipes out Friday’s dramatic falls, when the markets were hopeful that Nord Stream 1 would resume operations on Saturday morning, as expected.

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This contract closed at a record settlement price of 570p in mid-August, and briefly hit 670p back in March.

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Two years ago, next-day gas cost around 30p per therm, before rising demand, energy shortages, and then the Ukraine war all drove up gas prices.

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AJ Bell investment director Russ Mould, says:

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“Predictably, wholesale gas prices are soaring, raising the prospect of even higher energy bills for businesses and consumers and sending the pound and the euro to new multi-year lows against the dollar.

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“The US is in the enviable position of having relatively high levels of energy independence which insulate it from Putin’s proxy battle in the energy market as he looks to punish Europe for its support for Ukraine in the current conflict.

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“This step was not entirely unexpected and everyone will be looking for answers to the current crisis, however it seems unlikely investments in new sources of energy will bear much fruit in the short term.”

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More bad new. The UK economy shrank in August, in a sign that Britain’s economy could be falling into recession as energy prices spiral.

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The composite Purchasing Managers’ Index (PMI), which covers UK service firms and factories, has fallen into contraction territory, due to a “severe and accelerated drop in UK manufacturing output” and a slowdown in the services sector.

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The index, a gauge of activity, has dropped to 49.6, from 52.1 in July, and weaker than the ‘flash’ reading of 50.9 taken during August.

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This is the first reading below 50 (showing a contraction) in 18 months, when firms were suffering from Covid-19 lockdowns.

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The UK composite PMI (covering both services and manufacturing) moved into negative territory for the first time in 18 months, pulled down by weak manufacturing data in August. 3/3 pic.twitter.com/gmzwEQn6QF

— Mark Magill (@MarkMagill1982) September 5, 2022

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The report found that demand for consumer-facing services such as restaurants, hotels, travel and other recreational activities is collapsing, as the cost of living crisis forces consumers to cut back.

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Business confidence has slumped, with businesses reporting a drop in new orders – including the biggest drop in export demand since January 2021.

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The report warns:

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Elevated price pressures remain a worry for service sector companies, notably for energy, as does the prospect of higher interest rates and possible recession.

\n

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The report suggests Britain is slipping into recession, as soaring energy costs drive inflation into double-digit levels – highlighting the challenge facing the next prime minister.

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S&P Global Market Intelligence’s Chris Williamson says there is an “increasingly broadbased malaise” across the economy:

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“Jobs growth is already starting to weaken and, with hiring tending to lag changes in order books, the recent slump in demand alongside surging energy prices points to a growing reticence to employ staff in coming months.

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“Although the survey data are currently consistent with the economy contracting at a modest quarterly rate of 0.1%, deteriorating trends in order books suggest the incoming prime minister will be dealing with an economy that is facing a heightened risk of recession, a deteriorating labour market and persistent elevated price pressures linked to the soaring cost of energy.”

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The oil price is rising this morning, on suggestions that the Opec+ group of producers could decide to cut production today.

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Opec and its allies hold a regular monthly meeting from around noon, and sources suggest that they will discuss reducing oil production by 100,000 barrels per day in October.

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This has pushed up the Brent crude price by almost 3% this morning, to $95.65 per barrel.

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Earlier this year, Opec had been steadily increasing production, with the White House urging them to pump even more to bring down gasoline prices.

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Last month, they agreed to increase production by 100,000 bpd in September, much less than the 600,000bpd increase in both July and August.

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Brent crude has fallen since June, when it hit $125 per barrel, bring some relief to businesses and motorists. But Opec members may be keen to restrict output to push the price higher.

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OPEC+ TO DISCUSS OIL OUTPUT CUT BY 100,000 BPD AMONG OTHER OPTIONS – OPEC+ SOURCE.

— Breaking Market News ⚡️ (@financialjuice) September 5, 2022

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UK wholesale gas prices have jumped sharply in early trading too.

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The contract for gas delivery next month has risen by 25%, to 513p per therm, towards the five-month highs of nearly 650p set last month.

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Higher gas prices will have an immediate impact on businesses, and will also influence the price cap on British energy bills (which is already set to rise 80% in October, and will be next adjusted in January).

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As feared, European wholesale gas prices have surged at the start of trading.

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The benchmark Dutch TTF October gas contract has risen by 30%, up €62 to €272 per megawatt hours (MWh).

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The surge comes as traders react to the continued shutdown in Russia’s gas supplies to Europe through Nord Stream 1.

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That pipline runs under the Baltic Sea to Germany, and historically supplied around a third of the gas exported from Russia to Europe (but was already running at just 20% of capacity before the outage for maintenance last week).

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DUTCH WHOLESALE GAS CONTRACT FOR OCTOBER RISES 30.1% TO 272 EUROS/MWH

— Guy Faulconbridge (@GuyReuters) September 5, 2022

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Analysts are expecting gas prices to surge to record highs this week after Russia shut down the Nord Stream 1 key pipeline to Europe.

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Nathan Piper, an oil and gas analyst at Investec, said:

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“We are expecting record gas prices across UK/Europe next week as the impact of long-term restrictions of Russia gas supply is absorbed by the market following the indefinite shutdown of the Nord Stream 1 pipeline.”

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He added that the gas price “will remain volatile, and I’d expect a sharp move up tomorrow towards record 700-800p a therm highs.

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“However, the key and worrying point is that this is in the middle of summer – prices could move higher as demand increases for heating into winter … A big price jump next week has major implications on the [UK] energy price cap, and the cost for business/industry, who don’t have a price cap at all.”

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Sterling is also falling in early trading, hitting its lowest point against the dollar in almost 30 months.

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The pound has dropped by half a cent to $1.1460, its weakest point against the US dollar since March 20th 2020.

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Below that point, it will be the weakest since 1985.

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Naeem Aslam, chief markets analyst at Avatrade, says fears of an energy crisis this winter are hitting sterling and the euro.

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We believe that the actual reason that we are experiencing such an intense sell for the Euro and Sterling is that traders are worried that as winter is approaching, the situation with respect to energy resources is going to become a lot worse. This is despite the fact that lawmakers in the EU and in the UK are trying their best to assure everyone that they have the situation under control and Russia cannot dictate their future.

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However, the reality is that a conflict with Russia has sent the energy prices through the roof in Europe and in the UK. Consumers are struggling every day and worried about their energy bills. There is no short fix for this, given the nature of the economic health of the EU and UK, and a major disaster could be on the horizon.

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Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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The financial markets are being rocked by the shutdown of Russia’s Nord Stream1 pipeline, as the energy squeeze on European economies intensifies as winter approaches.

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The euro has fallen to a two-decade low in early trading this morning, after Russian energy major Gazprom extended the shutdown of its gas pipeline to Germany on Friday evening.

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FX: #EURO slides to the lowest level in two decades against USD: 0.9891, chart @BloombergTV pic.twitter.com/qxNm6ZpMt8

— ACEMAXX ANALYTICS (@acemaxx) September 5, 2022

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Fears over sky-high energy prices, and possible shortages, pushed the euro further below parity against the US dollar. sending the single currency as low as $0.9879 against the US dollar for the first time in two decades.

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#CNBCTV18Alert | Euro declines below 99 US Cents for the 1st time in two decades pic.twitter.com/acF37e4aAo

— CNBC-TV18 (@CNBCTV18Live) September 5, 2022

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Nord Stream 1 was due to restart operations on Saturday morning, after a three-day shutdown for maintenance. But Gazprom dashed hopes of a resumption on Friday night, blaming a leak.

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Analysts predict gas prices will soar, having fallen back from recent highs last week.

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Michael Hewson of CMC Markets explains:

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Russia’s actions on Friday in indefinitely closing the pipeline could see renewed upward pressure on European and UK natural gas prices when markets reopen today, after seeing big falls in prices last week as UK natural gas prices fell 39%, while European prices fell 33%.

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European stock markets are heading for sharp losses at the open, with Germany’s DAX down 2-3% in the futures market.

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Good morning from Europe where Europe is in risk-off mode after Russia cut off NS1 flows
– DAX / FTSE MIB/ CAC 40 futures seen 2-3% lower
– EUR at 0.9882 -0.6% ($GBP also plunging to new post pandemic lows of $1.1448)

— Joumanna Bercetche 🇱🇧 (@CNBCJou) September 5, 2022

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Also coming up today.

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The OPEC group and its allies are meeting to set production targets for October today. They’re likely to leave output quotes unchanges, although they could consider a small cut to production to prop up the oil prices.

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The latest service sector PMI reports will show how companies in the UK and eurozone fared last month.

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And UK car sales are expected to have risen slightly in August, according to the monthly data from the SMMT.

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The agenda

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  • 9am BST: UK new car sales for August

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  • 9am BST: Eurozone service sector PMI for August

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  • 9.30am BST: UK service sector PMI for August

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  • 10am BST: Eurozone retail sales for July

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  • Noon BST: Opec meeting+ begins

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main events

The British wholesale gas contract for immediate delivery has jumped 20%, to 360p per therm.

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Winter gas prices are rising too – which will bring even more pain to businesses and consumers if they remain at these levels (or rise even higher).

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The wholesale UK gas contract for November has jumped 27% to 660p per therm, while the December contract has risen 12% to 740p per therm. Both are near last month’s record highs.

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The day-ahead wholesale UK gas price has more than doubled this morning, as prices surged back towards this year’s record highs.

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Gas for delivery tomorrow has surged by 140% to 360p per therm, after Russia’s decision to shut the Nord Stream 1 pipeline intensified the energy crisis facing Europe.

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That more than wipes out Friday’s dramatic falls, when the markets were hopeful that Nord Stream 1 would resume operations on Saturday morning, as expected.

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This contract closed at a record settlement price of 570p in mid-August, and briefly hit 670p back in March.

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Two years ago, next-day gas cost around 30p per therm, before rising demand, energy shortages, and then the Ukraine war all drove up gas prices.

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AJ Bell investment director Russ Mould, says:

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\n

“Predictably, wholesale gas prices are soaring, raising the prospect of even higher energy bills for businesses and consumers and sending the pound and the euro to new multi-year lows against the dollar.

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“The US is in the enviable position of having relatively high levels of energy independence which insulate it from Putin’s proxy battle in the energy market as he looks to punish Europe for its support for Ukraine in the current conflict.

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“This step was not entirely unexpected and everyone will be looking for answers to the current crisis, however it seems unlikely investments in new sources of energy will bear much fruit in the short term.”

\n

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More bad new. The UK economy shrank in August, in a sign that Britain’s economy could be falling into recession as energy prices spiral.

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The composite Purchasing Managers’ Index (PMI), which covers UK service firms and factories, has fallen into contraction territory, due to a “severe and accelerated drop in UK manufacturing output” and a slowdown in the services sector.

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The index, a gauge of activity, has dropped to 49.6, from 52.1 in July, and weaker than the ‘flash’ reading of 50.9 taken during August.

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This is the first reading below 50 (showing a contraction) in 18 months, when firms were suffering from Covid-19 lockdowns.

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The UK composite PMI (covering both services and manufacturing) moved into negative territory for the first time in 18 months, pulled down by weak manufacturing data in August. 3/3 pic.twitter.com/gmzwEQn6QF

— Mark Magill (@MarkMagill1982) September 5, 2022

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The report found that demand for consumer-facing services such as restaurants, hotels, travel and other recreational activities is collapsing, as the cost of living crisis forces consumers to cut back.

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Business confidence has slumped, with businesses reporting a drop in new orders – including the biggest drop in export demand since January 2021.

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The report warns:

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\n

Elevated price pressures remain a worry for service sector companies, notably for energy, as does the prospect of higher interest rates and possible recession.

\n

“,”elementId”:”ee51ffcb-0cab-449c-b7ea-4e70ca5752fe”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The report suggests Britain is slipping into recession, as soaring energy costs drive inflation into double-digit levels – highlighting the challenge facing the next prime minister.

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S&P Global Market Intelligence’s Chris Williamson says there is an “increasingly broadbased malaise” across the economy:

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\n

“Jobs growth is already starting to weaken and, with hiring tending to lag changes in order books, the recent slump in demand alongside surging energy prices points to a growing reticence to employ staff in coming months.

\n

“Although the survey data are currently consistent with the economy contracting at a modest quarterly rate of 0.1%, deteriorating trends in order books suggest the incoming prime minister will be dealing with an economy that is facing a heightened risk of recession, a deteriorating labour market and persistent elevated price pressures linked to the soaring cost of energy.”

\n

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The oil price is rising this morning, on suggestions that the Opec+ group of producers could decide to cut production today.

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Opec and its allies hold a regular monthly meeting from around noon, and sources suggest that they will discuss reducing oil production by 100,000 barrels per day in October.

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This has pushed up the Brent crude price by almost 3% this morning, to $95.65 per barrel.

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Earlier this year, Opec had been steadily increasing production, with the White House urging them to pump even more to bring down gasoline prices.

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Last month, they agreed to increase production by 100,000 bpd in September, much less than the 600,000bpd increase in both July and August.

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Brent crude has fallen since June, when it hit $125 per barrel, bring some relief to businesses and motorists. But Opec members may be keen to restrict output to push the price higher.

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OPEC+ TO DISCUSS OIL OUTPUT CUT BY 100,000 BPD AMONG OTHER OPTIONS – OPEC+ SOURCE.

— Breaking Market News ⚡️ (@financialjuice) September 5, 2022

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UK wholesale gas prices have jumped sharply in early trading too.

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The contract for gas delivery next month has risen by 25%, to 513p per therm, towards the five-month highs of nearly 650p set last month.

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Higher gas prices will have an immediate impact on businesses, and will also influence the price cap on British energy bills (which is already set to rise 80% in October, and will be next adjusted in January).

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As feared, European wholesale gas prices have surged at the start of trading.

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The benchmark Dutch TTF October gas contract has risen by 30%, up €62 to €272 per megawatt hours (MWh).

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The surge comes as traders react to the continued shutdown in Russia’s gas supplies to Europe through Nord Stream 1.

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That pipline runs under the Baltic Sea to Germany, and historically supplied around a third of the gas exported from Russia to Europe (but was already running at just 20% of capacity before the outage for maintenance last week).

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DUTCH WHOLESALE GAS CONTRACT FOR OCTOBER RISES 30.1% TO 272 EUROS/MWH

— Guy Faulconbridge (@GuyReuters) September 5, 2022

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Analysts are expecting gas prices to surge to record highs this week after Russia shut down the Nord Stream 1 key pipeline to Europe.

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Nathan Piper, an oil and gas analyst at Investec, said:

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“We are expecting record gas prices across UK/Europe next week as the impact of long-term restrictions of Russia gas supply is absorbed by the market following the indefinite shutdown of the Nord Stream 1 pipeline.”

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He added that the gas price “will remain volatile, and I’d expect a sharp move up tomorrow towards record 700-800p a therm highs.

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\n

“However, the key and worrying point is that this is in the middle of summer – prices could move higher as demand increases for heating into winter … A big price jump next week has major implications on the [UK] energy price cap, and the cost for business/industry, who don’t have a price cap at all.”

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Sterling is also falling in early trading, hitting its lowest point against the dollar in almost 30 months.

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The pound has dropped by half a cent to $1.1460, its weakest point against the US dollar since March 20th 2020.

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Below that point, it will be the weakest since 1985.

“,”elementId”:”9fa6cd1e-0f1f-4ea4-94f3-6b26462ecfe8″},{“_type”:”model.dotcomrendering.pageElements.InteractiveBlockElement”,”url”:”https://interactive.guim.co.uk/charts/embed/sep/2022-09-02-11:18:21/embed.html”,”alt”:”The pound vs the US dollar”,”scriptUrl”:”https://interactive.guim.co.uk/embed/iframe-wrapper/0.1/boot.js”,”isMandatory”:false,”elementId”:”2676d6e1-bf97-4a29-b2e7-a0d5ac8741e3″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Naeem Aslam, chief markets analyst at Avatrade, says fears of an energy crisis this winter are hitting sterling and the euro.

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We believe that the actual reason that we are experiencing such an intense sell for the Euro and Sterling is that traders are worried that as winter is approaching, the situation with respect to energy resources is going to become a lot worse. This is despite the fact that lawmakers in the EU and in the UK are trying their best to assure everyone that they have the situation under control and Russia cannot dictate their future.

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However, the reality is that a conflict with Russia has sent the energy prices through the roof in Europe and in the UK. Consumers are struggling every day and worried about their energy bills. There is no short fix for this, given the nature of the economic health of the EU and UK, and a major disaster could be on the horizon.

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Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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The financial markets are being rocked by the shutdown of Russia’s Nord Stream1 pipeline, as the energy squeeze on European economies intensifies as winter approaches.

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The euro has fallen to a two-decade low in early trading this morning, after Russian energy major Gazprom extended the shutdown of its gas pipeline to Germany on Friday evening.

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FX: #EURO slides to the lowest level in two decades against USD: 0.9891, chart @BloombergTV pic.twitter.com/qxNm6ZpMt8

— ACEMAXX ANALYTICS (@acemaxx) September 5, 2022

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Fears over sky-high energy prices, and possible shortages, pushed the euro further below parity against the US dollar. sending the single currency as low as $0.9879 against the US dollar for the first time in two decades.

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#CNBCTV18Alert | Euro declines below 99 US Cents for the 1st time in two decades pic.twitter.com/acF37e4aAo

— CNBC-TV18 (@CNBCTV18Live) September 5, 2022

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Nord Stream 1 was due to restart operations on Saturday morning, after a three-day shutdown for maintenance. But Gazprom dashed hopes of a resumption on Friday night, blaming a leak.

“,”elementId”:”14aeb84f-fa3e-48f8-b8d3-8ed10ef184a0″},{“_type”:”model.dotcomrendering.pageElements.InteractiveBlockElement”,”url”:”https://interactive.guim.co.uk/uploader/embed/2022/07/gaspipelines-zip/giv-6562xgjfXzqXss4G/”,”alt”:”Russia’s gas supply routes to Europe”,”scriptUrl”:”https://interactive.guim.co.uk/embed/iframe-wrapper/0.1/boot.js”,”isMandatory”:false,”elementId”:”ce8f9fe8-cb56-4bf5-8719-067fc5430d79″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Analysts predict gas prices will soar, having fallen back from recent highs last week.

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Michael Hewson of CMC Markets explains:

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Russia’s actions on Friday in indefinitely closing the pipeline could see renewed upward pressure on European and UK natural gas prices when markets reopen today, after seeing big falls in prices last week as UK natural gas prices fell 39%, while European prices fell 33%.

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European stock markets are heading for sharp losses at the open, with Germany’s DAX down 2-3% in the futures market.

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Good morning from Europe where Europe is in risk-off mode after Russia cut off NS1 flows
– DAX / FTSE MIB/ CAC 40 futures seen 2-3% lower
– EUR at 0.9882 -0.6% ($GBP also plunging to new post pandemic lows of $1.1448)

— Joumanna Bercetche 🇱🇧 (@CNBCJou) September 5, 2022

\n”,”url”:”https://twitter.com/CNBCJou/status/1566669791393464320″,”id”:”1566669791393464320″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”6afc3554-5591-4089-a921-26883cba999d”},{“_type”:”model.dotcomrendering.pageElements.SubheadingBlockElement”,”html”:”

Also coming up today.

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The OPEC group and its allies are meeting to set production targets for October today. They’re likely to leave output quotes unchanges, although they could consider a small cut to production to prop up the oil prices.

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The latest service sector PMI reports will show how companies in the UK and eurozone fared last month.

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And UK car sales are expected to have risen slightly in August, according to the monthly data from the SMMT.

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The agenda

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  • 9am BST: UK new car sales for August

  • \n

  • 9am BST: Eurozone service sector PMI for August

  • \n

  • 9.30am BST: UK service sector PMI for August

  • \n

  • 10am BST: Eurozone retail sales for July

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  • Noon BST: Opec meeting+ begins

  • \n

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filters beta

UK gas prices jump for November and December

The UK wholesale gas contract for immediate delivery jumped 20% to 360p per heat.

Winter gas prices are on the rise, too – which will bring more pain to businesses and consumers if they stay at these levels (or rise higher).

UK wholesale gas contract November 27% jumped to 660 pixels per heat, while Dec The contract rose 12% to 740p heat. Both are close to record highs last month.

UK wholesale gas prices rise the next day

The UK wholesale gas price the following day more than doubled this morning, as prices returned to record highs for the year.

Gas delivered tomorrow rose 140% to 360p per heat, after Russia’s decision to shut down the Nord Stream 1 pipeline exacerbated the energy crisis facing Europe.

UK gas price next day
UK gas price next day Photo: Refinitiv

This is more than eliminating the dramatic declines on Friday, when markets were hoping that Nord Stream 1 would resume operations on Saturday morning, as expected.

That contract closed at a record settlement price of 570 pence in mid-August, and briefly reached 670 pence in March.

Two years ago, the price of gas the next day was about 30 pence heat, before high demand, energy shortages and then the Ukraine war drove gas prices up.

AJ Bell investment manager russ generatorSays:

Wholesale gas prices are expected to rise, raising the possibility of higher energy bills for businesses and consumers, and sending the pound and the euro to new multi-year lows against the dollar.

The United States is in the enviable position of enjoying relatively high levels of energy independence that isolates it from Putin’s proxy battle in the energy market as he looks to punish Europe for its support of Ukraine in the current conflict.

“This move was not entirely unexpected and everyone will be looking for answers to the current crisis, but it seems that unexpected investments in new sources of energy will pay off very much in the short term.”

UK recession looms after private sector contraction in August

More bad new. The British economy contracted in August, a sign that the British economy may slip into recession as energy prices rise.

The composite Purchasing Managers’ Index (PMI), which covers UK service firms and factories, has fallen into contraction territory, due to a “sharp and accelerated decline in UK manufacturing output” and a slowdown in the services sector.

The index, a measure of activity, fell to 49.6from 52.1 in July, and weaker than the “flash” reading, which recorded 50.9 during August.

This is the first reading below 50 (showing a contraction) in 18 months, when businesses were suffering from the Covid-19 shutdown.

The UK composite PMI (covering both services and manufacturing) moved into negative territory for the first time in 18 months, pulled down by weak manufacturing data in August. 3/3 pic.twitter.com/gmzwEQn6QF

— Mark Magill (@MarkMagill1982) September 5, 2022

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UK Composite PMI (covering both services and manufacturing) moved into negative territory for the first time in 18 months, weighed down by weak August manufacturing data. 3/3 pic.twitter.com/gmzwEQn6QF

– Mark Magill (@MarkMagill1982) 5 September 2022

The report found that demand for consumer-oriented services such as restaurants, hotels, travel and other leisure activities is collapsing, as the cost of living crisis forces consumers to cut back.

Business confidence waned, as companies reported a drop in new orders – including the largest drop in export demand since January 2021.

The report warns:

Higher price pressures remain a concern for service sector companies, particularly energy, as is the prospect of higher interest rates and a possible recession.

The report suggests Britain is slipping into recession, as rising energy costs push inflation into double-digit levels – highlighting the challenge facing the next prime minister.

Chris Williamson of S&P Global Market Intelligence He says there is “increasingly widespread concern” across the economy:

Job growth is already beginning to weaken, and with hiring trending to delayed changes in the order books, the recent dip in demand combined with higher energy prices suggests a growing reservation about hiring staff in the coming months.

“Although survey data is currently consistent with the economy contracting at a modest quarterly rate of 0.1%, deteriorating trends in the order books suggest that the next prime minister will deal with an economy facing an increased risk of recession, a deteriorating labor market and persistent cost-related high price pressures. exorbitant energy.”

The energy crunch, rising inflation and fears of recession dragged down business activity in the Eurozone for the second month in a row.

The latest Purchasing Managers’ Survey showed the services sector contracted in August, after a drop in industrial production reported on Friday.

The decline was particularly notable in the eurozone’s largest economy, Germany, according to a report by data provider S&P Global.

It found that the eurozone’s services sector contracted at the fastest pace in 17 months, pushing the broader euro economy to its biggest drop in 18 months.

#Eurozone services joined the manufacturing sector in contraction territory in August, latest #PMI showed, leading the composite #index to an 18-month low of 48.9 (Jul: 49.9). Rates of inflation softened though, providing some respite for firms. Read more: https://t.co/2PJIYOSnv2 pic.twitter.com/89dM7qCeQy

— S&P Global PMI™ (@SPGlobalPMI) September 5, 2022

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This increases the risk of the eurozone falling into recession this quarter, he explains Chris Williamsonchief business economist S&P Global Market Intelligence.

The deterioration is also becoming broader, with services now joining manufacturing in reporting production declines. After driving a growth spurt earlier in the year, consumer-facing services such as travel, tourism and entertainment have reported lower levels of activity as the rising cost of living prompts families to cut back on non-essential spending.

Meanwhile, financial services (including real estate) are feeling the pressure from rising interest rates, and industrial services are seeing their manufacturing customers cut back on spending amid sagging demand for goods.

In Turkey, inflation reached its highest level in 24 years …. of more than 80%.

Consumer prices jumped 80.2% last year, the Turkish Statistical Institute reported, the highest level since 1998.

It’s the 15th consecutive monthly increase in inflation, with energy and food prices soaring, in part due to the weak lira following last year’s Turkish interest rate cuts.

⚠️BREAKING:

*TURKEY AUG. CPI INFLATION JUMPS TO 24-YEAR HIGH OF 80.21%; EST. 81.22%; PREV. 79.60%

🇹🇷🇹🇷 pic.twitter.com/fYxSMg43ry

— Investing.com (@Investingcom) September 5, 2022

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This high inflation is a huge blow to consumers and businesses, but Bloomberg points out It is a little less than he feared:

The median forecast of 15 economists polled by Bloomberg was 81.2%. Price growth was 1.5% month over month, lower than expected in a separate survey.

“Somewhat less-than-expected inflation in Turkey in August is welcome news for the government and central bank,” said Per Hammarlund, senior emerging markets analyst at SEB.

“However, with energy prices rising again with the onset of the winter months, the problem of high inflation remains unresolved.”

#Turkey – Headline inflation rises to below-forecast 80.2% y/y in August

Inflation increase stems from core goods and services price hikeshttps://t.co/8qMedAe7HM#EmergingMarkets pic.twitter.com/4H8Br0hqSa

— EmergingMarketWatch (@EmergingMWatch) September 5, 2022

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Despite European gas prices It jumped 30% this morningthey are not Until now Above the record levels set this year.

This indicates that the risk of further disruption to Russian gas supplies to Europe is already priced in:

European #Gas Futures TTF is jumping 30% this morning to 265€ but now comes the critical point:
🚨Prices remain well below the highs of 346€. It seems like the potential of a complete shutdown of flows from #Russia was to some extent already priced in. pic.twitter.com/LON3PGDcKp

— Lukas Kuemmerle (@lukaskuemmerle) September 5, 2022

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European #Gas TTF futures jumps 30% this morning to €265 but now comes the crucial point:
Prices remain well below the highs of €346. It seems that the possibility of complete closure of flows from #Russia It’s already fairly priced. pic.twitter.com/LON3PGDcKp

– Lukaskuemmerle (@lukaskuemmerle) 5 September 2022

European natural gas prices open sharply higher after Russia shut downs sine die the Nord Stream 1 pipeline. TTF front-month futures up ~25% to €260 per MWh (equal to >$75 per Btu, or $440 per barrel of oil equivalent) #EnergyCrisis #EnergyTwitter

— Javier Blas (@JavierBlas) September 5, 2022

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European natural gas prices opened sharply higher after Russia shuts down conditional Nord Stream 1 pipeline dies. TTF front-month futures contracts up ~25% to €260 per megawatt-hour (equal to >$75 per British thermal unit, or $440 per barrel) of oil equivalent) #energy_crisis #energy_twitter

Javier Blas 5 September 2022

Electricity prices in France jumped a day earlier by 19%, reaching 590 euros / MWh.

Wholesale electricity prices in Germany also jumped this morning.

The power contract for next year’s base load jumped 24% to €620 per MWh.

A year ago, this contract was traded at €75/MWh – before the Ukrainian war it skyrocketed energy prices.

Last month, the contract briefly reached €1,000/MWh, a record, as part of a scramble to buy power.

GERMAN YEAR-AHEAD BASELOAD POWER PRICE UP 24% AT 620 EUR/MWH

— *seven (@sevenloI) September 5, 2022

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Electricity prices in Germany for the next year will rise by 24% at 620 euros / MWh

– * seven (sevenloI) 5 September 2022

The options I hear OPEC+ is mulling for today's meeting:

1) Roll-over current output quotas
2) ~100k b/d cut (reversing last month's symbolic hike)
3) Roll-over quotas, but keep OPEC+ meeting “in session”, potentially cutting before next month if needed#OOTT #EnergyCrisis

— Javier Blas (@JavierBlas) September 5, 2022

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Options I heard OPEC+ was considering at today’s meeting:

1) Extension of current production quotas
2) ~100,000 bpd (reversal of last month’s nominal high)
3) Quotas that are extendable, but keep the OPEC+ meeting “in session”, and potentially cut before next month if necessary#OOTT #energy_crisis

Javier Blas 5 September 2022

UK wholesale gas prices are rushing higher, as markets react to Russia’s decision to indefinitely suspend gas flows via Nord Stream 1 to continental Europe.

The UK gas contract a month ago is up almost 35% to 550p per heat today.

That’s up from 410p/therm on Friday afternoon, when gas prices fell in hopes that Nord Stream 1 would resume operations as planned.

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