Market Overview:
- DAX, CAC 40 and IBEX 35 trade lower – Earnings and Gas shortages drive sentiment
- Euro weakens against the safe-haven Swiss Franc (CHF), gloomy outlook burdens ECB
- Commodities – Oil and Natural gas trade higher while Bitcoin beating continues
Fundamental Risks Drive EU Equities Lower
Interest rates, inflation and earnings are at the forefront of risk sentiment as investors remain focused on the economic calendar. With the current geopolitical backdrop favoring risk averse assets, European equities are struggling to hold onto gains as disappointing earnings and accelerating recession fears show no reprieve towards the DAX 40, CAC 40 and IBEX 35 which are all trading lower for the day.
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DAX 40 Daily Chart
Chart prepared by Tammy Da Costa using TradingView
As the downward trajectory pertaining to EUR/USD remains intact, members of the EU (European Union) have agreed to reduce gas consumption by 15% (per country) from August in an effort to store gas for the winter.
This comes after Russia’s Gazprom announced its intentions to reduce the supply of gas to Germany through the Nord Stream 1 pipeline to 20% (from the current 40%) which is one fifth of the normal capacity (prior to the war).
With the additional supply cuts expected to take effect from tomorrow (27 July), the probability of a complete shutdown of Russian gas to Europe has increased significantly, driving both Crude Oil and Natural Gas prices higher..
The gloomy outlook combine with elevated inflation has placed the ECB (European Central Bank) in a difficult position to hike rates as aggressively as the Federal Reserve (Fed), BoE (Bank of England) and even the SNB (Swiss National Bank) without triggering a severe recession.
Following their stock counterparts, Bitcoin, Ethereum and a large portion of their alt-coin peers declined with BTC/USD threatening $21,000 currently holding as key psychological support.
Bitcoin (BTC/USD) Daily Chart
Chart prepared by Tammy Da Costa using TradingView
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--- Written by Tammy Da Costa, CFTe
Contact and follow Tammy on Twitter: @Tams707
