Global Gloom Grips European Markets, Brent Crude Drops Below $80

Bridgette Randall
07 Dec, 2022
Frankfurt

European market indexes declined for the fourth session in a row on the rising prospects of a global recession in 2023 and weak resource stocks led the decliners.

Resource stocks led the decliners on the worries that rising interest rates and ongoing inflation pressures spreading to the service sector are expected to keep consumer demand in check. 

 

Bond Yields

Bond yield across the eurozone and the UK dropped and German yields neared a 3-month low. 

Interest rates will rise but are "very near" the neutral level, said ECB policymaker Constantinos Herodotou on Tuesday and adding to the chorus of policymakers suggesting higher rates. 

The European Central Bank and the Bank of England are expected to announce rate decisions next week. 

The yield on 10-year German Bunds declined to 1.77%, French bonds fell to 2.2%, the UK Gilts eased to 3.04% and Italian bonds inched lower to 3.6%. 

 

Crude Oil Drops to 2022- Low 

Crude oil traded near a 11-month low as investors debated the rising prospects of a global economic slowdown and the latest data from China's international trade added to the market gloom. 

Brent crude oil declined 2.2% to $77.57 and the Dutch TTF natural gas futures rose 8% to 149.40 euros per MWh. 

 

German Industrial Production Eases 

German industrial production eased 0.1%after adjusting for seasonal factors and calendar in October from the previous month, the preliminary data from Destatis showed.  

In September, production rose 1.1% from the previous month. 

Industrial production was unchanged in October from a year ago. 

 

Natural Gas Based Electricity Production Rises In Germany 

Germany stepped up its electricity production using coal, renewable sources and natural gas in the third quarter, a separate report from Destatis showed Wednesday. 

About 36% of the electricity produced and fed into the grid in Germany in the third quarter of 2022 came from coal-fired power plants compared to 31.9% in a similar period a year ago.  

Electricity production from natural gas, too, rose despite high gas prices., an increase of 4.5% from a year ago and accounted for 9.2% of the electricity compared to 8.8% a year ago. 

This was the first time since the second quarter of 2021 that more electricity was produced from natural gas than in the same period a year earlier.

 

UK Home Price Fall Extend to Third Month

Home prices in the U.K. declined for the third month in a row in November, according to an index tracked by S&P Global, Lloyds Bank and Halifax.  

Home price index dropped 2.3% on a monthly basis, the steepest decline in 14 years, and annual pace of increase slowed to 4.7% from 8.2% 

Home prices fell in all regions and the average home price declined 2.3% to