Global gas markets have relaxed and equities have risen, as investors believe Russia will help Europe avoid a full-blown energy crisis.
Gas prices in Europe and the UK fell into early trading.
Russia, Europe’s main supplier of gas, has been accused by some European politicians of deliberately cutting off supplies for approval of the controversial Nord Stream 2 pipeline, which will send fuel directly to Germany.
Russia’s Energy Minister Alexander Novak said late Wednesday that the recently completed pipeline certification would send a “positive signal” that could “cool the current situation somewhat.”
Novak further suggested that increasing the volume of gas business on an electronic platform in St. Petersburg, operated by the Russian state-owned energy company Gazprom, could “control the speculation effect” on prices.
Signs that Russia may be ready to help were enough to restore European equities in Thursday morning’s trading. The benchmark Stocks 600 stock index rose 1.1 percent and the London FTSE 100 rose 100 percent.
The UK gas contract for November delivery, which rose nearly 40 per cent on Wednesday to more than 4 per m4, fell 18 per cent on Thursday to 23 2.23 per therm. The European TTF contract for November delivery was down 21 percent at € 90.50 per megawatt hour.
The combination of the recovery of the global economy from the epidemic in combination with rising gas prices, shortages of supply and long-term efforts to reduce the use of fossil fuels threatens economic growth and a slowdown in energy inflation.
Olivier Marciot, cross-asset investment manager at fund manager Unison, warned that while electricity prices could be moderate, high inflation could hurt consumers and central banks could be concerned about raising interest rates to curb inflation.
“We still think inflation will remain high and investors and central banks will stay with us longer than that at the beginning of the year,” he said. “It’s not just about gas,” he said, referring to epidemic labor crises in the United States, Europe and the United Kingdom, as well as rising commodity prices from cotton to coffee.
Headline consumer inflation in the United States is above 5 percent for three months and reached a 29-year high in Germany last month.
Meanwhile, U.S. Energy Secretary Jennifer Granholm told the Financial Times on Wednesday that the White House is considering releasing strategic oil reserves to close the gas shortage. Brent crude fell 1.2 percent to 80 80.13 a barrel after hitting close to 83 83.50 on Wednesday.
Government bond markets remained stable on Thursday after volatile trading in recent sessions, as traders backed away from bets ahead of Friday’s US non-firm pair report. U.S. employers forecast nearly half a million jobs in September, which analysts believe could persuade the Fed to decide that the economy has recovered enough from the epidemic and began reducing its 120 120 million bond purchases that have boosted debt and equity markets in the Coronavirus era. .
The yield on the benchmark 10-year Treasury note, which moves in the opposite direction of its value and affects the cost of global orrowing, was flat at 1.517 percent. It rose to about 1.3 percent at the end of September.
The UK’s 10-year gilt yield, which last week topped 1 per cent for the first time since March 2020 as traders expected stability and interest rates rose, fell 0.02 percentage points to 1.055 per cent.
Sterling stood at 35 1.3596, up 0.1 percent against the dollar. The dollar index, which measures the greenback against six major currencies, fell 0.1 percent.