Political events in Britain and investors’ risk aversion

Due to the lack of a clear vision, the recent tense political climate in Britain has led to an uncertain future
This has resulted in investors pulling their large stakes out of the country’s internal markets
and it happened after the resignation of two prime ministers in favour of current Prime Minister Boris Johnson.

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U.S. futures and bond turbulence as fears of recession persist

Gas prices in Europe fall as Norway’s energy workers strike end

The euro continues to fall and the dollar rises in front of everyone

The British Finance Minister resigned shortly after the Minister of Health did, citing difficulties in carrying out his official duties and said,
“I have come to the decision that we cannot continue like this
” In a statement on Twitter, he continued, “It has become evident that the approach between the government
and it is fundamentally different as I prepare for the scheduled speech on the economy next week.”

Due to global risk sentiment and Bank of England policy, the pound sterling fell to its lowest level since March 2022
while British stocks rebounded on Wednesday due to the recovery of European stocks
which was the opposite of previous years at the time of Brexit negotiations.

Sudden income tax

Tuesday’s resignation of Chancellor Rishe Sonak may result in a delay or complete elimination of the sudden gains tax on UK power generators.
While SONAC was already outlining measures to tax oil and gas producers
the British Treasury has come under fire for stalling ideas when rumors caused generator share prices to drop.

U.S. futures and bond turbulence as fears of recession persist

The futures markets of US stock indices and treasury bonds have seen a swing between gains and losses amid fear of a slowdown in the global economy
with the Nasdaq 100 and the S&P 500 rising, contract prices on the Stoxx 600 index changed in the biggest price change since June 24
while the US yield curve for two years and ten years remained inverted
as investors await the minutes of the last meeting of the Federal Performance Measurement Council.

Investors, especially deal hunters on tech stocks, are seeking to boost U.S. stock metrics
which has helped mask some deep declines in stocks linked to economic activity
as well as the renewed downturn in Europe’s gas crisis portends a global economic slowdown despite tighter monetary policy by central banks to contain the consumer price problem.

According to Bloomberg Economic forecasts: The probability of an economic recession in the United States reached 38% next year
a model that measures the likelihood of a recession based on a combination of factors such as housing permits
consumer survey data and the gap between 10-year and 3-month Treasury bond yields
which showed an increase in the likelihood of an economic recession by 38% over the next 12 months, up from 0% a few months ago.

Gas prices in Europe fall as Norway’s energy workers strike end

After the great rises of European natural gas during the last period in light of the continuation of crises
but soon with the habit of decline after the decision of the intervention of the Norwegian government to end the strike of energy workers
and Germany took steps to alleviate the supply crisis, the Norwegian government proposed a mandatory wage
council to solve the problem of strike for energy workers, which could have led to the closure of more than half of Norway’s gas exports
Labor Minister Marty Maguss also indicated that she had no choice because of the potential repercussions on Europe.

The European continent has been facing an energy crisis for decades as Russia has been curbing shipments amid rising tensions
over the war on Ukraine and sanctions against Russia.

It is worth mentioning that the main Nord Stream pipeline will close this month for maintenance
and there is a concern that it will not return to full service after operation.
Prolonged power outages will also hurt Europe’s plan to renovate gas storage facilities, and this will increase pressure on global LNG supplies.

Germany in the face of the non-return of Nord current flows

The German government on Tuesday issued legislation allowing it to rescue troubled energy companies
as part of efforts to reduce the effects of the supply crisis
One of the proposals to parliament is to pass part of the increasing cost of gas to the consumer.
The current situation will require Europe to sacrifice some summer industrial uses of gas to reach full million before peak winter demand.

The Dutch front-month futures traded lower at €154.50/mWh at 6.4% and the UK equivalent fell 17%
erasing the gains made in the past two days.

The euro continues to fall and the dollar rises in front of everyone

The euro fell to a 20-year low as investors grapple with the prospect of Russia cutting off its gas supplies to Europe
and plunge the region into recession. In light of this shock, it will be difficult for the ECB to lift tight monetary policy.
According to Bloomberg’s options pricing model, there is an almost 50% implicit probability that the currency will reach parity against the dollar next month, with the euro reaching 1.0185 against the US dollar, and therefore as the European economy heads towards recession
expectations increase that the euro with the dollar equivalent is imminent.

Interest rate differential with USA expected to increase

The ECB is expected to raise interest rates by 25 basis points later this month
The Fed has already raised interest rates by 150 basis points so far

Warning against buying at the moment

With growing concern by Germans about the main pipeline carrying Russian natural gas to Europe
may not return to full capacity after planned maintenance this month
the International Energy Agency warned that a complete cut-off of flows could not be ruled out given
“Russia’s unexpected behavior under sanctions imposed for its war on Ukraine.”
Although Europe is seeking to reduce dependence on Russian energy, this is proceeding at a slow pace
increasing the likelihood of a recession
The euro remains unexpected and virtually unpurchasable this summer, senior market analyst at SGB believes.

The dollar continues to strengthen and is heading to 107.

After the occasional moves of the US dollar index at 104 levels, it rebounded strongly again to reach almost 107 points
an increase rate of 0.2%.
The rise came with the possibility of an economic recession that could hit the US economy as well
as markets await the minutes of the Federal Reserve meeting on Wednesday amid any sign of monetary policy.

Political events in Britain and investors&#8217; risk aversion

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Political events in Britain and investors’ risk aversion