# Asia shares ease, euro slugged by energy crisis
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-05
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Europe Faces Dire Energy Crisis: Markets Brace for Interest
Meta Description: Get the latest updates on the EU energy crisis causing market dips. Stay informed on currency exchange rates and financial trends in Europe and beyond.
URL: https://financedigest.com/asia-shares-ease-euro-slugged-by-energy-crisishtml

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By Wayne Cole

SYDNEY (Reuters) – Asian shares slipped on Monday while the euro took a fresh spill after Russia shut a major gas pipeline to Europe, leading some governments there to announce emergency measures to ease the pain of soaring energy prices.

The euro was down 0.4% at $0.9908 and looking likely to test its recent 20-year low of $0.99005 as markets priced in more risk of a European recession.

Germany announced [plans to spend 65 billion euros](https://www.financedigest.com/eu-seeks-clarification-on-italy-post-covid-plan-freezes-19-billion-euros.html "EU seeks clarification on Italy post-COVID plan, freezes 19 billion euros") ($64.7 billion) on shielding customers and businesses from rising costs, while Finland and Sweden offered liquidity guarantees to keep power companies open.

[Oil prices](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain") jumped along with the whole energy complex as a holiday in U.S. [markets made for thin trading conditions](https://www.financedigest.com/condition-monitoring-service-market-buoyant-with-flourishing-power-generation-industry-adoption-exhibits-a-notable-decline-amid-covid-19-pandemic-fmi.html "Condition Monitoring Service Market Buoyant with Flourishing Power Generation Industry; Adoption Exhibits a Notable Decline Amid COVID-19 Pandemic: FMI"). News of more coronavirus [lockdowns in China](https://www.financedigest.com/samsung-micron-warn-chinas-xian-lockdown-could-disrupt-memory-chip-manufacturing.html "Samsung, Micron warn China’s Xian lockdown could disrupt memory chip manufacturing") only added to the jittery mood.

MSCI’s broadest index of Asia-Pacific [shares outside Japan eased](https://www.financedigest.com/bank-shares-rise-after-credit-suisse-rescue-eases-crisis.html "Bank shares rise after Credit Suisse rescue eases crisis") 0.1%, and Japan’s Nikkei was off 0.3%.

[Wall Street](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease") fared better as S&P 500 futures edged up 0.3% and Nasdaq futures 0.2%, though EUROSTOXX 50 futures were expected to open lower.

The energy [crisis is an added complication for the European Central Bank](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded") (ECB) as it meets this week to consider how much to raise interest rates.

[“Europe is faced with a dire energy](https://www.financedigest.com/europes-energy-crisis-and-the-nuclear-path-out.html "Europe’s energy crisis and the nuclear path out") outlook, with numerous anecdotes of firms cutting back production,” said Tapas Strickland, head of market economics at NAB.

The ECB will undoubtedly decide to hike [rates](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk") this week,” he added “Markets are close to fully pricing in a 75bp hike after numerous ECB officials said they were leaning that way, though there is still likely to be a debate around 50 v 75.

EURO, [STERLING STRUGGLE](https://www.financedigest.com/sterling-struggles-to-pull-away-from-march-2020-low.html "Sterling struggles to pull away from March 2020 low")

Central banks in [Canada and Australia](https://www.financedigest.com/brazil-to-resume-visa-requirements-for-us-japan-australia-canada-sources.html "Brazil to resume visa requirements for US, Japan, Australia, Canada -sources") are also expected to raise interest rates this week, while Federal Reserve Chair Jerome Powell and several other policy makers will make appearances and are likely to sound hawkish on inflation.

While the August U.S. jobs report showed some welcome signs of cooling in the labour market, investors are still leaning toward a [hike of 75 basis points from the Fed](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade") this month.

The two-year U.S. [Treasury yield](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") did fall almost 12 basis points on Friday and futures were trading flat on Monday amid general risk aversion.

The shift to safety again benefited the U.S. dollar, which hit another two-decade high on a [basket of major currencies](https://www.financedigest.com/the-yuan-makes-its-official-entry-into-rawbanks-currency-basket.html "The yuan makes its official entry into RAWBANK’s currency basket") at 110.040.

The [dollar was firm](https://www.financedigest.com/dollar-stands-firm-while-traders-await-cpi.html "Dollar stands firm while traders await CPI") at 140.50 yen, just short of Friday’s 24-year top of 140.80.

Sterling was struggling at $1.1481, after diving as deep as $1.1458 and [levels last seen in March 2020 at the start of the pandemic](https://www.financedigest.com/uk-job-vacancies-fall-to-post-pandemic-levels-rec-says.html "UK job vacancies fall to post-pandemic levels, REC says").

We now expect the EUR/USD and GBP/USD [rates to reach $0.90 and $1.05 respectively next year as the economic slowdown](https://www.financedigest.com/hopes-of-slowdown-in-rate-hikes-bolster-shares-ahead-of-u-s-gdp.html "Hopes of slowdown in rate hikes bolster shares ahead of U.S. GDP") and the terms of trade shock hitting the region take their toll,” said Jonas Goltermann, a senior economist at Capital Economics.

British foreign minister Liz Truss said on Sunday she would [set out immediate action in her first week in power](https://www.financedigest.com/negotiating-our-future-youth-set-to-grab-power-roles-at-cop27.html "‘Negotiating our future’: Youth set to grab power roles at COP27") to tackle rising energy bills and increase energy supplies if she is, as expected, appointed prime minister on Monday.

The strong [dollar kept gold](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides") flat at $1,709 an ounce. \[GOL/\]

[Oil prices](https://www.financedigest.com/oil-prices-rise-on-u-s-drawdown-chinese-fears-weigh.html "Oil prices rise on U.S. drawdown, Chinese fears weigh") were supported by expectations gas prices would leap in Europe later in the day.

Ultimately, Germany would need to [cut natural gas consumption by 15%](https://www.financedigest.com/eu-asks-countries-to-cut-gas-demand-by-15-until-spring.html "EU asks countries to cut gas demand by 15% until spring") to keep gas storage facilities from running empty,” said analysts at ANZ. Gas rationing looks very likely, as even at 95% full, storage would only [last 2.5 months.”](https://www.financedigest.com/monkeypox-emergency-could-last-months-with-window-closing-to-stop-spread-experts-say.html "Monkeypox emergency could last months, with window closing to stop spread, experts say")

OPEC+ is meeting on Monday and is likely to keep oil output quotas unchanged for October, although some sources would not rule out a small production cut to bolster prices that have slid due to [fears of an economic slowdown](https://www.financedigest.com/logitech-quarterly-sales-fall-22-as-slowdown-fears-bite.html "Logitech quarterly sales fall 22% as slowdown fears bite"). \[O/R\]

Brent was up $1.54 at $94.56, while U.S. crude rose $1.38 to $88.25 per barrel.

(This story corrects [euro’s 20-year low vs dollar](https://www.financedigest.com/pound-hits-10-month-peak-euro-up-as-dollar-under-pressure.html "Pound hits 10-month peak, euro up as dollar under pressure") to $0.99005, not $0.90005, in second paragraph)

(Reporting by Wayne Cole; Editing by Shri Navaratnam)


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