Deepening energy crisis may force emergency meeting
US announces aid package for Ukraine
Iran wants in on Europe’s oil market
China unveils more stimulus.
Europe’s energy crisis continued to deepen as natural gas prices surged to near record highs. European Union energy ministers may hold an emergency meeting to discuss the spike in power markets as leaders strike a more urgent tone on the unfolding crisis. The Czech Republic, which holds the EU’s rotating presidency, is considering calling a gathering to debate the idea of capping electricity prices, the CTK newswire cited Industry Minister Jozef Sikela as saying. Meanwhile, UK research groups warned the government would have to draw up previously “unthinkable” plans to protect homes and businesses from a winter catastrophe.
A $2.98 billion package of arms for Ukraine announced by President Joe Biden sent a signal of future US support to the nation. Biden emphasized in a statement that the weapons, “our biggest tranche of security assistance to date,” is aimed at ensuring Ukraine “can continue to defend itself over the long term.” The new military aid is aimed at disabusing Russian President Vladimir Putin of the notion that “he can wait everybody out,” Colin Kahl, undersecretary of defense for policy, told reporters at the Pentagon. Germany earlier finalized a planned shipment to Ukraine of additional weaponry and ammunition worth more than $499 million.
Eyes on Europe
Iran is aiming to fill the void left behind by Russia in the European oil market if the Middle Eastern country can secure a deal with world powers over its nuclear program. The Islamic Republic’s state oil producer will try to win back customers in countries like Greece, Italy, Spain and Turkey in the event that sanctions targeting its energy industry and economy are eased, according to people with knowledge of the country’s strategy. At the end of the year Europe will ban most of its member states from buying seaborne cargoes of Russian oil.
$146 Billion Stimulus
China stepped up its economic stimulus with a further 1 trillion yuan ($146 billion) of funding largely focused on infrastructure spending. But the support likely won’t go far enough to counter the damage from repeated Covid lockdowns and a property market slump. The State Council, China’s Cabinet, outlined a 19-point policy package, which included 300 billion yuan that state policy banks can invest in infrastructure projects, on top of 300 billion yuan already announced at the end of June. The State Council said the moves would not flood the economy with excessive stimulus.
European stock futures traded flat while Asian shares advanced, as traders weigh fresh Chinese stimulus and await the Jackson Hole symposium. The ECB publishes an account of its July policy meeting. Bank of Finland’s Tuomas Valimaki speaks about the European economy and monetary policy. Expected data include 2Q GDP for Germany and August manufacturing confidence for France. Peloton reports earnings after unveiling a sweeping turnaround. Dollar General and TD Bank are also scheduled to issue results.
(Source: Bloomberg, August 25-2022)