Wall Street is quiet on Labor Day, but global markets have no such holiday.
Angela Weiss/AFP via Getty ImagesGlobal stocks were falling Monday as acute fears of an energy crisis rose in Europe and the euro plunged to its lowest level in decades. Investors in the U.S. have a break from the latest tumult in markets for the Labor Day holiday.
While U.S. stock and bond markets are shuttered Monday , stock-index futures continue to trade. Futures for the Dow Jones Industrial Average gained 90 points, or 0.3%, after the index tumbled 337 points last Friday to end at 31,318, closing out the third consecutive week of losses. S&P 500 futures rose 0.2% with tech stock-heavy Nasdaq futures 0.3% higher.
All the action was overseas.
In Frankfurt, the DAX plunged 2.2% amid a souring of investor sentiment in Germany, where worries over energy were most pronounced. In the U.K., London’s FTSE 100 was among the more resilient indexes in Europe, slipping 0.1% after foreign secretary Liz Truss was named as the successor to Boris Johnson as the next British prime minister.
In Asia, Tokyo’s Nikkei 225 shed 0.1%, while Hong Kong’s Hang Seng Index retreated 1.2% as new Covid-19 restrictions in China spooked investors.
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Front and center is the impact of news from late Friday that Russia’s state-owned Gazprom would indefinitely halt natural-gas flows to Europe via the Nord Stream 1 pipeline, citing technical issues. European governments have framed it as an economic attack and the latest knock-on from sanctions linked to Russia’s invasion of Ukraine. The Gazprom decision came hours after finance ministers from the Group of Seven—or G-7, which includes the U.S., U.K., and France—moved to implement price caps on Russian oil.
“European stock markets are plunging at the start of the week following a day of mixed trade in Asia, with Gazprom’s announcement on Friday weighing heavily on the bloc,” said Craig Erlam, an analyst at broker Oanda. “A bank holiday in the U.S. often results in relatively quiet trade everywhere else but that’s certainly not looking the case today.”
European natural-gas prices have surged and the euro declined as investors reacted to news of the Nord Stream halt, which raises the prospect of even more severe energy-price inflation and a recession in Europe. The euro fell below parity with the U.S. dollar , down to just above 99 cents on the dollar, for the first time in 20 years.
“All this has slightly overshadowed a big week for central banks,” noted Jim Reid, a strategist at Deutsche Bank. Wednesday brings the Federal Reserve’s Beige Book report on economic conditions, with Fed Chairman Jerome Powell giving a speech Thursday—the same day the European Central Bank will meet over rates.
U.S. investors are likely to remain razor-focused on the Fed . Facing the highest inflation in 40 years, the central bank has moved to aggressively tighten financial conditions in recent months in a bid to get rising prices under control. These moves, which included the biggest interest-rate hikes in decades, have already knocked stocks this year. The Fed’s next decision on rates comes later in September.
In the commodity space, futures for U.S. benchmark West Texas Intermediate crude gained 4% to above $90 a barrel. The OPEC+ group of oil-producing nations—which includes Russia and Saudi Arabia— agreed to cut crude production by 100,000 barrels a day in a bid to support prices that have slumped lower in recent months.
Here are three stocks on the move Monday:
A renewal of Covid-19 lockdowns in China has hit Chinese tech stocks, with the Hong Kong-traded shares of Alibaba (ticker: BABA) down 2.4% and e-commerce peer JD.com (JD) 3% lower.
The Zurich-traded shares of Credit Suisse (CS) lost 3.5% amid reports that the bank’s board was discussing an extensive breakup of its investment bank, with the U.S. side of the business largely at risk in a move that could cost 5,000 jobs.
Write to Jack Denton at jack.denton@dowjones.com
