European Markets Headed Lower, Natural Gas Prices Soared 10%

Bridgette Randall
09 Oct, 2023
Frankfurt

European markets turned lower and extended previous week's losses but the resource heave index in London advanced. 

Investors were cautious in Monday's trading after violence erupted in the world's most dangerous region and Israel stepped up its bombing activities in Palestine after a Hamas controlled group carried out targeted missile attacks. 

The conflict escalated to the third day and at least 1,100 people have died so far after Israel carried out its most severe bombing campaign that included several civilian targets. 

 

German Industrial Production Declined In August

German industrial production decreased 0.2% from the previous month in August, deStatis reported Monday. 

Energy production declined 6.6% from the previous month, construction output fell 2.4% and machinery and capital equipment production declined 2.4%. 

But vehicle production soared 7.6% after falling 9.4% in July.

Industrial production estimate was downwardly revised to a decline of 0.6% in July. 

From a year ago, production shrank 2% after contracting 1.7% in July, the statistical bureau reported. 

 

Natural Gas Prices Surged 10% 

Crude oil prices jumped more than 4% after investors got first chance to react to the news of Israel-Palestine war 

Natural gas futures soared 10% after a leak was reported in the pipe network between Estonia and Finland.

The sudden drop in pressure in the natural gas flow, forced authorities to shutdown flow and repair works could take several months. 

Ample natural gas supplies and above average temperatures this month along with weakening industrial activities have kept natural gas prices relatively stable. 

Prices are still significantly lower than a year ago when prices were above €60 per MWh.   

 

Europe Indexes & Yields

The DAX index decreased 0.7% to 15,121.42, the CAC-40 index fell 0.5% to 7,025.05 and the FTSE 100 index rose 0.1% to 7,502.59.

The yield on 10-year German bonds decreased to 2.87%, French bonds traded lower to 3.46%, the UK gilts edged down to 4.56% and Italian bonds rose to 4.95%.

The euro edged lower to a three-month low to $1.051, the British pound to $1.218 and the U.S. dollar fetched 90.81 Swiss cents.

Brent crude increased $2.49 to $87.50 a barrel and the Dutch TTF natural gas edged lower by €4.67 to €42.90 per MWh.

 

Europe Stock Movers 

Energy stocks advanced after crude oil prices surged 4% and air transportation stocks declined. 

TotalEnergies, Repsol, BP Plc and Shell jumped between 1% and 3% after the Middle East conflict flared up. 

Lufthansa, Air France KLM and the parent of British Air IAG declined between 3% and 4%. 

Defense companies were in focus and traded higher. 

Rhienmetall AG jumped 4.5% to €245.0, Leonardo SpA added 4.3% to €13.48 and Saab AB advanced 7.2% to skr 562.00. 

Metro Bank Holdings Plc jumped 15% to 51.82 pence on reports that Bank of England held preliminary discussion with large banks amid search for a buyer for the troubled bank.