European indices drop as concerns over gas supply return
European stock market indices are trading under pressure at the start of a new week. Major Western European indices are all down over 1%. German DE30 trades 1.7% lower, Italian ITA40 and French FRA40 drop 1.6% while Spanish SPA35 declines 1.2%. Polish W20 slumps 2.5% and is top laggard while UK100 outperforms with a drop of "just" 0.6%. Meanwhile, EURUSD is trading just a touch above parity level.
Moods at the beginning of a new week are poor as a result of the Russian announcement. Russia said that the only working turbine in the Nord Stream gas pipeline is going for a 3-day maintenance at the end of August. This means that the already crippled gas supply to the EU will be reduced further and will make it harder to build up reserves ahead of winter period. On top of that, there is a risk that gas flows will not resume after 3 days as they are being used by Russia to gain leverage over the West in a geopolitical stand-off. Gas flows - their volume and its volatility - look to be one of the main drivers for European assets in the run-up to heating season and throughout it.
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Open account Try demo Download mobile app Download mobile appTaking a look at DE30 at the H4 interval, we can see that the index continues to move lower following a break below the lower limit of the ascending wedge pattern. DE30 is currently making a break below the 13,350-13,450 pts zone marked with the lower limit of a market geometry.
Source: xStation5
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