Daily summary: Specter of energy crisis becomes more serious

Despite the lack of trade in the US and Canada, today's session brought considerable volatility to trading floors in Europe and the energy commodities market

On the Old Continent, supply led the way during today's trading, with the DAX losing 2.22%, the CAC40 down 1.2% and the Euro Stoxx 50 losing 1.53%. 

Data on the service sector PMIs in Europe came out rather mixed, mainly due to weakness in Germany and passing consensus in Spain:

• Germany: 47.4 (preliminary 48.2; previous: 49.7)

• France: 51.2 (preliminary: 51; previous: 53.7)

• Italy: 50.5 (consensus: 48.2; previous: 48.6)

• Spain: 50.3 (consensus: 52.9; previous: 52.8)

• EMU: 49.8 (preliminary: 50.2; previous: 51.2)

As we can see, slightly better readings in France and Italy were unable to neutralize the weakness in Europe's service sector. Industry in Europe is still doing well, but services may be showing the way toward recession. If the energy situation in Europe does not improve before the heating season begins, services and industry may actually behave very poorly

Strong rising energy prices are causing the German government to decide to introduce more transfer packages. According to a government spokesman, the new package could exceed EUR 65 billion and join the two previous packages. Recall that the previous packages included, among other things, tax cuts on fuel and the introduction of cheap tickets for public transportation.

The new package, on the order of at least EUR 65 billion, is expected to join the previous ones on the order of EUR 30 billion. The new package is to include, among other things:

• Surcharges for pensioners on energy-related bills (one-time payment of EUR 300)

• Surcharges for students (one-time payment of the order of EUR 200)

• EUR 1.5 billion is to be used to subsidize transportation tickets, which currently cost EUR 9 per month

Shares of Credit Suisse Bank (CSGN.CH), whose management is said by media reports to be negotiating the elimination of its investment banking division and a move into private banking, fell more than 3% today. The main issue, according to media reports, is the winding down of the IB unit in the US, which would put nearly 5,000 employees at risk.

The new leader of the Conservative Party and Prime Minister of the UK is Liz Truss, the former Foreign Secretary. 

The British pound and the Australian dollar are the best performing currencies of developed countries. The Japanese yen and the Canadian dollar are the weakest performers. 

The technical committee at OPEC+ is recommending a production cut of 100,000 barrels per day in October. Recall that in September there was a decision to raise by 100 thousand barrels per day, so we don't actually have a big change. Moreover, OPEC+ is producing far less than the production target anyway.

The Kremlin has stated that Russia will halt gas supplies until economic sanctions are removed, which raised TTF gas prices by more than 17% today. The situation is escalating, and while some stocks have been replenished, the current halt in supply may prevent enough gas from being secured for the winter.

The crypto market was relatively dormant today, with the largest projects in terms of capitalization holding close to yesterday's closing levels. BTC remains below $20,000.

TTF forward 1-month gas prices reacted with a vigorous rally to Friday's announcement that NS1 has halted the flow of gas and today's announcement that the Kremlin is ready to block the flow of gas to Europe until economic sanctions imposed on Russia are lifted. Source: Bloomberg