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Tuesday, 30 August 2022

EU energy prices up. EU currency down. Iranian oil…?

EU hits panic button as energy crisis escalates: The EU plans to “decouple” electricity prices from gas as part of an emergency package of measures to tackle the spiraling energy crisis in the continent, EU Commission President Ursula von der Leyen said yesterday. Natural gas and electricity prices are now 10x higher than they were a year ago as the sanctions war between Europe and Russia disrupts gas supplies.

Also in the cards: Price caps on wholesale gas and taxes on windfall profits made by the energy sector are also being discussed.

This could last for years, says Shell: “It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and a very, very quick buildout of alternatives,” CEO Ben van Beurden said. (AFP | Financial Times | Bloomberg)


Investors are upping wagers against the EUR as Europe’s energy crisis goes from bad to worse, the Financial Times reports. Investor wagers on a decline in the value of the EUR reached their highest level since the start of the pandemic, as the threat of recession in Europe intensifies prompted by record energy prices. The EUR fell below USD parity last week, reaching a two-decade low of EUR 0.99.

Also contributing to the EUR’s bearish outlook: The unstoppable rise of the USD. The USD hit a 20-year high on Monday following signals from Jackson Hole that the Fed will continue to raise interest rates, Reuters reports. The USD peaked at 109.28 on the USD index, which measures the currency's value relative to a basket of foreign currencies.

A mega rate-hike in Europe was enough to lift the currency off its lows yesterday: Several European Central Bank officials were reported to be in favor of a 75-bps interest rate hike in September, helping lift the currency off its multi-decade lows against the greenback yesterday.


Sweetener for a nuclear deal? Iran is ready to bring an estimated 60-93 mn barrels of Iranian oil to the global market if a nuclear agreement is reached with the US, Bloomberg reports, citing shipping tracking data.

Tempting for Biden? The US president has had mixed results convincing his Gulf allies and other OPEC nations to ramp up production as the sanctions war with Russia sends shockwaves through global energy markets. Iranian supply could ease some of the pressure just as the Biden administration stops drawing on its strategic crude reserves in October and OPEC+ threatens to curb production.

Oil is now back in triple digits after Saudi Arabia last week threatened to cut output. Brent crude finished yesterday’s trading session at USD 103 a barrel yesterday, its highest close since the end of July.

Down

EGX30

10,122

-0.6% (YTD: -15.3%)

Up

USD (CBE)

Buy 19.15

Sell 19.26

Up

USD at CIB

Buy 19.18

Sell 19.24

None

Interest rates CBE

11.25% deposit

12.25% lending

None

Tadawul

12,531

0.0% (YTD: +11.1%)

Down

ADX

9,964

-1.1% (YTD: +17.4%)

Down

DFM

3,436

-0.8% (YTD: +7.5%)

Down

S&P 500

4,031

-0.7% (YTD: -15.4%)

Down

FTSE 100

7,427

-0.7% (YTD: +0.6%)

Down

Euro Stoxx 50

3,571

-0.9% (YTD: -16.9%)

Up

Brent crude

USD 105.09

+4.1%

Up

Natural gas (Nymex)

USD 9.35

+0.6%

None

Gold

USD 1,749.70

0.0%

Up

BTC

USD 20,205

+1.2% (YTD: -56.4%)

THE CLOSING BELL-

The EGX30 fell 0.6% at yesterday’s close on turnover of EGP 1.58 bn (46.4% above the 90-day average). Local investors were net buyers. The index is down 15.3% YTD.

In the green: Qalaa Holdings (+3.6%), Alexandria Containers (+3.3%) and Palm Hills Development (+2.1%).

In the red: Madinet Nasr Housing (-7.0%), Elsewedy Electric (-3.0%) and Ibnsina Pharma (-2.4%).

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