After a difficult start in Asia, most of the region has moved into positive territory
HONG KONG (AFP) – Asian and European stocks mostly rose along with the euro on Thursday after Russia resumed gas supplies to Europe, as traders await a crucial ECB policy meeting.
After a rocky start in Asia, most of the region moved into positive territory following news that the Nord Stream 1 gas pipeline taps had been reopened after 10 days of maintenance.
The announcement lifted some uncertainty among traders who feared Moscow would keep gas flows cut off in retaliation for sanctions imposed by Brussels following Vladimir Putin’s invasion of Ukraine.
Putin had said the Nord Stream 1 pipeline would be reactivated, but added that supplies would be limited unless a row over some elements of the sanctions was resolved.
But Western leaders remain cynical about its plans ahead of winter in the northern hemisphere, and the European Commission has urged EU members to cut demand for natural gas by 15% over the winter to counter the “blackmail” of Russia.
The IMF warned on Wednesday that a supply cut could reduce 2022 GDP by 1.5%.
After a negative start, Asian and European stocks mostly rose as the more bullish mood followed another rally on Wall Street on the back of healthy earnings.
Tokyo, Sydney, Seoul, Mumbai, Taipei, Bangkok and Wellington advanced while London, Paris and Frankfurt were higher after opening.
But Hong Kong, Shanghai, Singapore and Manila fell.
Analysts remain cautious about the near-term outlook for the global economy as it is rocked by a range of issues, including war in Ukraine, an energy crisis, China’s slowdown and supply chain issues. .
The euro has climbed again, after falling to parity with the dollar last week, in part due to the European Central Bank’s sluggish response to inflation from a series of sharp rate hikes in the Federal Reserve.
– Rise in European rates? –
The focus is now on the ECB as it prepares to raise rates for the first time in more than a decade, with most observers expecting a quarter-point hike and some speculating on a half-point movement.
Officials are walking a tightrope as they must try to tame searing inflation without tipping the economy over a cliff, all against the backdrop of an energy crisis triggered by the invasion of the Ukraine by Russia.
Added to this is a new political crisis in Italy which could see Prime Minister Mario Draghi ousted, leading to months of uncertainty.
There was little reaction to US President Joe Biden’s comments that he would hold talks with Xi Jinping ‘within the next 10 days’ as he decides whether or not to scrap some Trump-era tariffs on Chinese goods. .
And Cameron Dawson of NewEdge Wealth said recent gains in the markets could not yet be taken as a sign of recovery.
He warned that many stocks were “still in very distinct downtrends so you can see a rally maybe an oversold level but really if you don’t start to recover and get into a better uptrend it’s it really remains to be seen if this can continue”. .
“So it’s more of a relief at this point and not necessarily a change in trend.”
Oil extended Wednesday’s decline – with WTI below $100 – after data showed US inventories rose more than expected last week as Americans opted out of paying for expensive gasoline .
The numbers are coming in despite being at the height of the popular summer driving season.
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