European natural gas prices rose to a record high on Thursday on heightened concerns about Russian supplies, while global stocks rose ahead of a key speech by Federal Reserve Chairman Jerome Powell.
Europe’s benchmark Dutch gas contract TTF rose to €318 per megawatt-hour before paring gains.
That was not far from the record high of 345 euros reached in March shortly after Russia invaded Ukraine.
Prices have jumped in recent days due to the approaching three-day shutdown of Russian supplies to Germany via the Nord Stream 1 gas pipeline.
Meanwhile, one-year forward contracts for electricity prices in both France and Germany rose on Thursday to record a peak on concerns about the winter energy crisis.
– “Gas on an unstoppable upward march” –
“Gas is on a seemingly unstoppable rise again, a dramatic move that will exacerbate the energy crisis,” Hargreaves Lansdown analyst Suzanne Streeter said.
“Energy-saving plans are already in place to darken streets across Germany and make public buildings cooler, but much tougher measures may have to be applied given dwindling gas supplies.”
In stock market trading, European shares pushed higher, mirroring growth in Asia.
Frankfurt also gained some strength from news that Germany’s economy expanded by an anemic 0.1 percent in the second quarter.
That was an improvement from the previous forecast of zero growth, but analysts remain bearish.
“I’m trying to find reasons to be optimistic about this, but really it just means the economy may take a little longer to slip into recession,” OANDA analyst Craig Earlom warned.
“With the energy crisis unlikely to improve, this likely means at best another quarter of flat growth before the economy slips into recession later this year.”
Asian indexes rose after China unveiled new measures to stimulate its economy.
Traders followed positive gains on Wall Street, where the Dow, Nasdaq and S&P 500 closed higher.
Meanwhile, central bankers are meeting in Jackson Hole, Wyoming, this week.
All eyes are on Powell’s speech on Friday to learn about the Federal Reserve’s plans to curb rampant inflation with higher borrowing costs.
There are concerns that the Fed’s fight against soaring inflation could lead to a recession in the United States, which in turn could hit the global economy, which is still recovering from the Covid pandemic.
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– Chinese incentive –
Central banks around the world are trying to find a delicate balance between containing inflation and avoiding recessions.
The problem was compounded this year by Russia’s invasion of Ukraine, which led to a sharp rise in energy and food prices.
Traders are also watching how China recovers from economic damage from strict Covid controls, a crisis in the real estate sector and power shortages caused by record heat.
China’s State Council announced new measures to strengthen the economy on Wednesday, including steps to encourage credit, consumption and investment, the official Xinhua news agency reported.
They also included support for power producers and agriculture, two sectors hit particularly hard by the heat, although the Xinhua report on the State Council meeting did not mention the extreme weather.
Key figures around 10.10 GMT –
London – FTSE 100: rose 0.4 percent to 7,501.04 points
Frankfurt – DAX: Up 0.2 percent to 13,251.85
Paris – CAC 40: up 0.1 percent to 6,395.84
EURO STOXX 50: Up 0.2 percent to 3,674.31
Tokyo – Nikkei 225: Up 0.6 percent to 28,479.01 (close)
Hong Kong – Hang Seng Index: Up 3.6 percent to 19,968.38 (close)
Shanghai Composite: up 1.0 percent to 3,246.25 (close)
New York – Dow: up 0.2 percent to 32,969.23 (close)
EUR/USD: Up $0.9999 from $0.9970 on Wednesday
Pound/dollar: rose to $1.1842 from $1.1799
Euro/pound: down 84.44p from 84.47p
Dollar/yen: rose to 136.42 yen from 136.36 yen
West Texas Intermediate: rose 0.1% to $94.94 a barrel
Brent North Sea crude rose by 0.1% to $101.32