On Tuesday, European shares climbed to a high of more than five weeks after a report stated that gas flows from Russia to Europe through the Nord Stream 1 pipeline would begin as per schedule on Thursday. This eased some concerns about a reduction in the gas supply of the continent.
Pipeline to resume
According to some sources, the pipeline, which carries about one-third of the natural gas exports from Russia to Europe, would begin to do the same on Thursday, as the annual maintenance period comes to an end. However, they also added that it would not be operating at a full capacity of about 160 million cubic meters daily.
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On Tuesday, an earlier report cited Johannes Hann, the European Budget Commissioner, who said that the European Union was not expecting the biggest gas pipeline to resume supplying after its annual maintenance period.
Market analysts said that the energy crisis is one of the biggest concerns of citizens and investors of Europe. They said that having a stable or unstable piece of energy is undoubtedly important news for the continent.
Stock index climbs
The continent-wide STOXX 600 index recorded gains of 1.4%, which took it past its highest level seen on June 10th. Furthermore, it also meant that it was the third straight day of gains for the pan-European index.
Earlier in the session, the index had recorded a decline of as much as 0.7% because of worries about a slowdown in economic growth and a more hawkish European Central Bank (ECB). According to sources, the policymakers of the ECB are considering hiking the interest rates by 50 basis points in Thursday’s meeting in order to bring down inflation that has reached record highs.
However, the ECB had signaled earlier that interest rate hikes would be around 25 basis points for July, it being the first since 2011, and bigger hikes would come later. The STOXX 600 has shed 13.2% this year because of fears of a decline in economic growth because of tightening financial conditions.
The outlook seems very gloomy since economic activity in China has also been disrupted due to COVID-19 lockdowns, the euro has weakened and the Russia and Ukraine conflict is affecting European energy supplies. Market analysts said that the ECB was in a tough spot, as it has to tighten policy to combat inflation, but also needs to keep it loose to protect some of its member countries.
On Tuesday, the stock market saw broad-based gains, with the automobile sector in the lead. It recorded a rise of 3.1%, while banks came second with a gain of 2.9%. There was also a 2.7% gain in Germany’s DAX index, which is the highest recorded in most indexes in the region.
There was also a 14.7% gain in shares of EDF after the French government proposed a buyout deal for taking full control of the power firm in exchange for 9.7 billion euros. A 5.5% fall was recorded in Telenor, as the telecom operator reduced its EBITDA guidance for 2022.
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