Markets stabilise, but gas leaks raise risks in Europe
|European stocks are on the rise despite concern over gas imports into Europe. While the UK mini-budget does raise risks of higher-for-longer rates, traders are holding off until we see whether the BoE opt to move.
European markets stability, but fears remain
“European markets are on the rise despite the volatility and uncertainty that has dominated in the wake of Kwasi Kwarteng’s mini-budget. For the pound, there is a risk that a pro-growth stance at the treasury will be undermined as its inflationary impact pushes the BoE into an emergency rate hike. Mortgage providers have already started preparing for sharply higher rates, with homeowners fearing the day they have to re-fix at a dramatically higher rate. However, it is not just consumers that will be impacted, with the cost of long-term borrowing at the treasury rising above levels seen in Italy and Greece. With Truss and Kwarteng under pressure less than a month into their appointment, traders will hope that this provides a stark warning over the need to be fiscally responsible despite the desire spend their way out of this crisis.”
Key gas pipelines leak, with European stockpiling efforts coming into focus
“European efforts to brace itself for a tough winter will come under the spotlight in the wake of a series of gas leaks that are clearly aimed at disrupting flows of gas from Russia. With Russia already having gradually restricted exports through the Nord Stream 1 pipeline, this latest disruption will likely draw a line under the amount of gas Russia will provide Europe for the entirety of this coming winter. “
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