Get all your news in one place.

100’s of premium titles.
One app.

Start reading

Get all your news in one place.

100’s of premium titles. One news app.

Start reading

AFP

Business

Eurozone stocks slide, gas prices soar

Gas Prices Euro eurozone (Location) Russia Gazprom Europe London Natural Gas Ukraine United States

As Russia keeps cranking down supply, gas prices are rising in Europe. ©AFP

London (AFP) - Eurozone equities sank Tuesday, as natural gas prices surged after Russia tightened the screw on supplies in fresh Ukraine fallout.

Investors also digested major earnings updates on the eve of another likely large US interest rate hike aimed at tackling soaring inflation.

General Motors reported a big drop in second-quarter profits owing to a semiconductor shortage.

Google parent Alphabet, Coca-Cola, Microsoft and McDonald's are also publishing results Tuesday.

Europe gas reference price Dutch TTF surged more than 10 percent to 198.00 euros per megawatt hour, one day after Russia's Gazprom said it would cut daily gas deliveries to Europe via the Nord Stream pipeline.

"With no clear timeline for when capacity is likely to increase, the prospect of further uncertainty over gas supplies is weighing on European markets today," CMC Markets analyst Michael Hewson told AFP.

Frankfurt's DAX slumped 0.9 percent while the CAC in Paris shed 0.5 percent.

"The euro is also under pressure as it becomes increasingly apparent that a slowing economy will make it increasingly difficult for the ECB to hike aggressively as we head into the winter months.Good luck raising rates against that sort of backdrop," he added.

It fell by more than one percent to under $1.0150.

Eurozone bond yields also fell as investors fled to the relative safety of government debt.

Oil prices also leapt on concerns of a broader squeeze on global energy supplies, while the euro remained on the back foot against the dollar.

Gazprom will cut the gas deliveries to 33 million cubic metres a day -- about 20 percent of the pipeline's capacity -- from Wednesday.

That has heightened market worries over supplies during the northern hemisphere winter later this year.

At the same time, European Union member states have reached agreement on how to cut their consumption of gas by 15 percent and reduce their dependence on Russian energy.

Gas prices remain way below the record March peak of 345 euros struck after Russia launched its assault on Ukraine.

Markets.com analyst Neil Wilson predicted a "big push to fill (gas) stockpiles in what is left of the summer, at any price, to avert a winter crisis".

EU states have accused Russia of squeezing supplies in retaliation for Western sanctions.

Elsewhere Tuesday, Asian stock markets closed mixed.

Investors welcomed news that e-commerce giant Alibaba would seek a primary listing in Hong Kong, which could pave the way for it to be traded by mainland Chinese investors.

Wall Street opened lower, with a profit warning by Walmart rattling investors.

The retailer said it expects its earnings per share in its non-standard second quarter, which wraps up at the end of this month, to be down by 8-9 percent with an even bigger reduction next year.

Walmart shares tumbled more than eight percent at the start of trading.

"The basis for Walmart's warning, though, is the real issue for the broader market," said Patrick J. O'Hare at Briefing.com.

The retailer said food and fuel inflation was pushing consumers to defray discretionary spending on general merchandise.

"That is causing concerns about a trickle-down effect to other retailers, as well as suppliers to Walmart, that is weighing on sentiment and earnings expectations," said O'Hare.

He said this was also fanning fears the US Federal Reserve, which meets Wednesday and Thursday, will pursue aggressive rate hikes to tame inflation.