Russia has shut down the supply of natural gas to Europe through the Nord Stream 1 pipeline
Wall Street stocks fell on Monday to post their biggest declines in more than a week amid the news about a new COVID-19 subvariant in China and also ahead of US inflation data due later in the week. The Dow Jones Industrial Average shed 0.52%, the S&P 500 fell 1.15%, while the Nasdaq Composite lost 2.26%. In individual stocks, shares of Twitter lost more than 11% after Tesla CEO Elon Musk said he is trying to terminate his $44 billion takeover of the company, claiming that Twitter had not provided the information necessary to calculate the number of spam accounts on the platform.
Following suit, Asian stock markets were down as investors remained depressed amid rewed COVID outbreaks in China, Europe’s energy shortages and the prospect of further tightening by central banks despite the rising recession risks. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3% to hit the lowest level in two years. China’s Shanghai Composite gave up nearly 1%, Hong Kong’s Hang Seng shed 1.10%, and Japan’s Nikkei 225 plunged 1.77% after yesterday’s gains.
In Europe, equities opened lower on Tuesday as risk aversion continued to persist while investors’ focus shifted to the US inflation report due on Wednesday. The June CPI is expected to show headline inflation rising above May’s 8.6% figure. Adding to a downbeat tone in Europe, the energy crisis escalated further after Russia has shut down the supply of natural gas to Europe through the Nord Stream 1 pipeline on Monday.
Meanwhile, the dollar index, which tracks the currency against a basket of six peers rose to 108.50, the highest since October 2002. The buck has retreated marginally since then while still clinging to the upper end of the extended trading range in early European deals. Against this backdrop, EURUSD hit parity for the first time since 2002, threatening the 1.00 mark that could be derailed in the near term as the greenback could derive extra support from the US CPI report.
