European markets have started the week very much on the back foot, as further increases in European gas prices to new record highs, keeps the focus on the increasing prospect of a European recession, as we head into the autumn and winter months.
Europe
The German DAX is bearing the brunt of the losses today, with manufacturers getting hammered, with the likes Mercedes, BMW and Porsche down heavily, while the FTSE100 is also lower, though the defensive part of the index is helping to mitigate the losses, with health care, AstraZeneca higher, and utilities, along with a weaker pound helping to offset some of the weakness.
Despite lower oil prices travel and leisure is also getting hit hard with the likes of IAG, easyJet and Wizz Air seeing heavy losses, on the basis that consumers will have less income to spend on going on holiday.
Vodafoneshares are lower despite agreeing the sale of its Hungary operation to 4iG and Corvinus for €1.8bn.
Cineworld shares have tanked again this morning after confirming the speculation last week that it was looking at a number of restructuring alternatives, including the prospect of a Chapter 11 bankruptcy filing in the US.
US
US markets have taken their lead from European markets opening sharply lower as natural gas prices surge on both sides of the Atlantic, with the Nasdaq 100 leading the losses.
The meme stock bubble is also imploding again with cinema chain AMC Entertainment shares down heavily as its new APE preferred shares start trading, and sector peer Cineworld confirms it’s looking at a possible Chapter 11 bankruptcy.
Bed Bath & Beyond is also continuing its slide of the last few days, as some of their suppliers start holding back deliveries on late payment of bills, while GameStop is also sharply lower as well, as investor focus shifts back to valuations.
FX
The US dollar has continued its upward march higher coming to within touching distance of its July peaks against a basket of currencies, with the euro slipping below parity again, and retesting the lows seen last month, at 0.9950, with a break potentially targeting further losses towards 0.9620.
The pound has also come under pressure slipping back below 1.1800 for the first time in over a month, with a move below 1.1760 potentially targeting a move back to the 1.1500 area.
Commodities
Fears over recession and/or economic slowdown have continued to weigh on crude oil prices with prices sharply lower even as natural gas prices on both sides of the Atlantic continue to rise. US natural gas prices have risen to 14-year highs as equivalent prices in Europe surge to new record highs.
The strength of the US dollar is also tearing into metals prices with significant falls in platinum and palladium prices. Gold has continued to slip back as well, slipping to a four-week low.
Volatility
Shares in Just Eat Takeaway added close on 30% at one point in Friday’s trade because of news that the company was to dispose of a Brazilian holding. The stock is still close on 60% lower since the start of the year, but that update before the weekend break saw daily volatility spike to 194% against 121% on the month.
Cryptocurrencies sprang back to life too, with activity seen across the board here. Bitcoin slumped lower on Friday, cancelling hopes that a recovery rally may be looming with global recession fears seen as dampening risk appetite once again. The legacy coin saw daily vol advance to 73.72% against 51.59% for the month, whilst elevated levels of activity were seen elsewhere in the asset class. EOS was another notable stand out for price action, posting daily vol of 139% against 83.57% on the month, although this has managed to recover some of its losses during weekend trading.
Lumber prices sold off heavily into the weekend break with those recession fears again a likely driver. The underlying still sits a little way above recent lows for now, but daily vol pushed out to 160% against 135% on the month.
Finally, a shock decision by the Turkish Central Bank to cut interest rates on Thursday despite inflation reaching 80% left the Dollar-Lira trade as the most active fiat currency pair. Daily volatility here advanced to 10.18% against 8.07% on the month.
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