European stocks plunged on Monday and the euro hit a new 20-year low in dollars. by threat of a recession in the eurozone Due to the gas crisis following the interruption of supplies from Russia.
The Natural gas prices skyrocketed by almost a thirdMeanwhile he Petroleum rose on expectations that the OPEC and its Russian-led allies could decide at a meeting on Monday reduce crude production in an attempt to raise prices.
The rapid gas crisis in Europe caused Frankfurt shares fell more than three percent before cutting losses, while Paris lost as much as two percent.
London stocks also lost ground ahead of the highly anticipated announcement of Britain’s next prime minister around 1130 GMT.
“Energy as a weapon”
“Russia’s continued militarization of energy supplies continues to increase downside risks for European economies and the euro”said Lee Hardman, a currency analyst at financial services group MUFG.
The euro sank to $0.9878 on Monday, its lowest level since December 2002.despite expectations that the European Central Bank will raise interest rates again on Thursday to combat skyrocketing inflation.
Europe’s common currency has tumbled about 13 percent against the dollar since the start of the year, also hurt by more aggressive monetary tightening by the US Federal Reserve.
The state gas giant gazprom announced Friday night that the key gas pipeline north stream would remain closed indefinitelyblaming leaks.
The Gazprom’s announcement came on the same day that G7 nations said they would work to quickly implement a price cap on Russian oil exports, a move that would deprive the Kremlin of critical revenue for its war against Ukraine.
The resumption of deliveries via the pipeline, which runs from near St. Petersburg to Germany under the Baltic Sea, was due to resume on Saturday after what Gazprom described as three days of maintenance work.
“Gloomy scene before winter”
The news intensified a energy crisis caused by Europe’s sanctions on Moscow for its invasion of Ukraine in February.
Investors fear a power supply crisis during winter of the northern hemisphere of maximum demand.
That could potentially lead to a painful recession.
“Russia’s decision to shut off gas supplies to Europe hangs over the continent like a gloomy shadow before wintersaid AJ Bell Chief Investment Officer Russ Mould.
At the same time, governments around the world are dealing with the impact of skyrocketing home energy costs.
Germany presented on Sunday a new package of 65,000 million euros ($65 billion) to help households cope with rising pricesand pointed at windfall profits of energy companies to help finance the measure.
That took the Berlin’s total relief to almost 100 billion euros since the beginning of the Ukrainian war.
Elsewhere on Monday, Asian stocks experienced mixed listings, after last week’s upbeat US jobs report partly offset fears about Europe’s outlook and China’s new coronavirus lockdowns.
(With information from AFP and EFE)