European stock markets tumbled into the red on Thursday as natural gas prices dropped back to their levels before the Ukraine war.
In London, the FTSE 100 (^FTSE) fell 0.6% after opening, while the CAC (^FCHI) tumbled 0.5% in Paris, and the DAX (^GDAXI) was 0.3% lower in Frankfurt.
The month-ahead European gas future contract fell as low as €76.78 per megawatt hour, its lowest level in 10 months, according to Refinitiv data.
This is thanks to warmer-than-normal temperatures this winter, and consumption reduction targets.
UK gas prices have also declined from their highs earlier this year. The day-ahead gas price closed at 155p per therm on Wednesday, compared with 200p/therm at the start of 2022, and over 500p/therm in August.
Watch: Why did gas prices rise?
It comes as industrial action is continuing across Britain today, with the new head of the Trades Union Congress (TUC) warning that further strikes lie ahead in 2023, unless it enters negotiations over pay rises.
Incoming general secretary Paul Nowak said “we must end Britain’s living standards nightmare” – which has been fuelled by higher energy costs – and is also accusing ministers of “sabotaging efforts to reach settlements”.
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Across the pond on Wall Street, S&P 500 futures (ES=F) were up 0.1%, Dow futures (YM=F) shed 0.06%, and Nasdaq futures (NQ=F) were 0.4% higher as trade began in Europe.
On Wednesday, US stocks closed down with the S&P 500 and NASDAQ falling 1.2% and 1.35% respectively.
Yesterday’s sell-off went beyond tech shares, with oil company valuations following commodity price downwards, and the US airlines with exposure to winter storm cancellations also having a bad day.
Traders will be awaiting US weekly jobless data later this afternoon.
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Stocks in Asia were lower overnight with the Nikkei (^N225) falling 0.9% in Japan while the Hang Seng (^HSI) fell 0.8% in Hong Kong, and the Shanghai Composite (000001.SS) dipped 0.4% on the day.
“China has seen a rise in citizens booking overseas travel following the lifting of quarantine rules on arrival, but it may not be totally plain sailing for Chinese tourists as other countries voice concern on the transparency of data on domestic cases in China,” Derren Nathan, head of equity research at Hargreaves Lansdown, said.
“Japan has imposed new entry restrictions on Chinese visitors and the US will also now require Chinese residents to show a negative test on entry.”
The Russian rouble also fell to an eight-month low against the dollar on Thursday, as Moscow fired 120 missiles at cities across Ukraine, according to officials. It is the biggest wave of strikes in the country for weeks.
The currency dropped to 72.9 roubles to the US dollar this morning, the weakest level since late April. Analysts are predicting that sanctions on Russia’s oil and gas sales will hit export revenues.
Watch: How does inflation affect interest rates?
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