Financial Markets Daily Report26 July 2022
Investors started the week trading cautiously, taking on board weak sentiment data, hawkish commentary by some ECB officials and news reporting that Russia is due to reduce gas supplies to Europe.
- Investors started the week trading cautiously, taking on board weak sentiment data, hawkish commentary by some ECB officials and news reporting that Russia is due to reduce gas supplies to Europe.
- On the data front, the IFO survey for Germany showed the business climate index dropping to 88.6 in July, the lowest level in more than two years, driven by uncertainty around rising costs and energy provision. On the latter, Russia’s energy group Gazprom said it would cut existing flows on the Nord Stream 1 pipeline in half to 20% from Wednesday.
- Separately, ECB head C. Lagarde said the ECB will keep raising rates for as long as necessary but noted that decisions will be based on data. Latvian central bank governor Kazaks noted a rate hike in September needs to be “significant”.
- In this context, equity prices were mixed while bond yields dropped across Europe, as traders readjusted their expectations about rate increases in the eurozone. European natural gas prices rose notably.