Global stocks tumble as Europe faces new gas supply pressure
In early trading, the FTSE 100 in London fell 1.1% to 7,198.73 and the DAX in Frankfurt fell 3.2% to 12,628.44. The CAC 40 in France fell 2% to 6,047.28.
Gazprom’s announcement puts European stocks under “strong pressure”, ING’s Chris Turner said in a report.
Also on Friday, US government data showed hiring slowed in August, but wages rose sharply. Forecasters said the Federal Reserve could see that, as evidence, more interest rate hikes are needed to bring down inflation which is at its highest level in four decades.
“Markets have abandoned early optimism for a sense of foreboding,” Mizuho Bank’s Tan Boon Heng said in a report.
On Wall Street, the S&P 500 future was down less than 0.1%. That of the Dow Jones Industrial Average gained less than 0.1%.
The Dow Jones also fell 1.1% on Friday after the Labor Department announced that the US economy added 315,000 jobs in August. That was down from July’s 526,000, but average hourly earnings jumped an unusually wide margin of 5.2% from a year earlier.
The Nasdaq composite lost 1.3%.
In Asia, the Shanghai Composite Index rose 0.4% to 3,199.91 after the Chinese government tightened controls on movement in the southern business hub of Shenzhen following virus outbreaks. .
The Nikkei 225 in Tokyo fell 0.1% to 27,619.61 while the Hang Seng in Hong Kong fell 1.2% to 19,225.70.
Seoul’s Kospi lost 0.2% to 2,403.68 while Sydney’s S&P-ASX 200 added 0.3% to 6,852.20.
New Zealand and Bangkok fell while Singapore and Jakarta advanced.
European economies are facing gas shortages after their governments agreed to cut purchases from Russia to punish the Kremlin for invading Ukraine.
Last week, state-owned Gazprom announced a three-day suspension of gas supply via Nord Stream 1 due to urgent maintenance work.
On Friday, the company said that would be extended indefinitely. Russia has already reduced deliveries to countries that have sided with Ukraine.
Meanwhile, traders are eyeing the Fed with concern after Chairman Jerome Powell said Aug. 26 interest rates needed to stay high to curb soaring inflation. That dashed hopes that the Fed might back down on signs of slowing US economic activity.
The Fed has raised rates four times this year, twice by 0.75 percentage points, triple its usual margin.
Central banks in Europe and Asia also hiked rates, stoking fears of derailing global economic growth.
The US market gave up much of the gains made in July and August when traders hoped the Fed might relax.
Traders are expecting another 0.75 percentage point rate hike at this month’s Fed meeting, according to CME Group.
In energy markets, benchmark U.S. crude gained $2.18 to $89.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 26 cents to $86.87 on Friday. Brent crude, the price basis for international oil trade, added $2.54 to $95.56 a barrel in London. It advanced 66 cents the previous session to $93.02.
The dollar rose to 140.50 yen from 140.13 yen on Friday. The euro fell from 99.64 cents to 99.26 cents.