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European shares drop as Middle East conflict and tepid earnings weigh
European?shares dipped?on Thursday due to a?growing?Middle East Conflict, and a series of patchy corporate results. As of 8:10 AM GMT, the pan-European STOXX 600 index was down by 0.3% to 610.72. On Wednesday, the benchmark index had its best day for'more than three months. It recovered some of the earlier losses. The mining sector was the worst affected, with a decline of 1.5%. The U.S. and Israel war with Iran is now in its sixth day, but there's no quick resolution in sight. Iran launched another barrage of missile attacks on Israel earlier that day. And the U.S. Senate voted against a motion to stop the U.S. air campaign. Investors are also 'watching' for the speech of European Central Bank president Christine Lagarde due later that day, to get clues about the outlook for monetary policy. The markets are also waiting for the retail sales data from January in the Eurozone and the construction PMI of last month. Shares of Nexi, a payments company, were halted after a 11.3% drop, a record-low following its full-year results. DHL fell 5.4% after the German logistics group announced a 1.3% drop in operating profit for the fourth quarter, which was weighed down by their freight forwarding business.
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Sources say that India's MRPL has shut down its refinery units due to oil shortage.
India's Mangalore ?Refinery and Petrochemicals has shut ?a crude unit and ?some ?secondary units ?at its 300,000-barrel-per-day refinery due to oil shortage, three sources with knowledge of the matter said on Thursday. As a result of Iranian threats against shipping through the Strait of?Hormuz, crude oil flow has been disrupted. Strait of Hormuz is the conduit for a fifth of all crude oil consumed worldwide. Some Chinese refiners are already cutting runs. The state-run refiner shut from Wednesday evening the 100,000-barrel-per-day crude unit and secondary ?units, including a hydrocracker, at its complex in the southern state ?of Karnataka, two sources said. MRPL didn't 'immediately repond to a request for comment. The refiner who stopped buying Russian oil in late 2012 is mainly dependent on purchasing oil from the Middle East. MRPL has 'already suspended'refined fuel shipments due to the Middle East conflict. (Reporting and editing by Nidhh Verma)
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MSC charges a war surcharge for shipments to Africa, Indian Ocean Islands and the islands
Shipping company MSC announced on Thursday that it would implement a "war-surcharge" to impose a surcharge for cargoes going from the Indian subcontinent, Gulf countries and other parts of the world to African nations and Indian Ocean islands. This was after the maritime traffic in the Straits of Hormuz & Bab El-Mandeb had been disrupted. MSC announced that the surcharges would be effective on Thursday for cargoes from the Indian subcontinent, to East Africa and Somalia as well as to Mozambique, South Africa and Indian Ocean Islands. MSC announced that the surcharges for cargoes coming from India will be $500 for a 20-foot equivalent unit for dry containers and $1,000 for refrigerated ones. MSC said it would charge $2,000 per 20-foot container, $3,000 per 40-foot container and $4,000 for refrigerator containers on cargoes from Gulf countries to African nations.
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Snam, the Italian gas grid operator, plans to invest 14 billion euros by 2030
Snam, an Italian company, plans to invest 16 billion euros (14 billion euros) in the next five years, concentrating on its gas infrastructure. This includes storage assets and terminals for liquefied gas, according to a strategy it published on Thursday. The gas grid operator is expected to divest non-core assets valued at 1.6 billion euros under its new CEO Agostino Scrnajenchi and make selective acquisitions of 1.2 billion euros. Scornajenchi stated that "we are pragmatically addressing challenges in the current global context. Energy?demand is expected to increase in the medium to long term, and gas will continue to play an important role." Snam's adjusted net profit for the full year rose 10.3% to $1.42 billion, in line with its previous guidance. It showed resilience in its regulated activities as well as discipline in its financial structure. The group, which is controlled by the state, expects a profit of around 1,45 billion euros in 2026. As part of the new strategic plan, it is anticipated that net income will?grow by an average 4.5% per year?until 2020. It also proposed that a?dividend of 0.3021?euro per share be paid out of last year's profits. Reporting by Mirko Milorelli in Gdansk and Francesca Landini, Milan; Editing Emelia Sithole Matarise
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Russian drone strikes foreign cargo ship near Ukraine Black Sea port
The Ukrainian Sea Ports Authority reported late Wednesday that a Russian drone had damaged a civilian Panama-flagged ship transporting 'corn near the Ukrainian port of 'Chornomorsk' in the Black Sea Odesa area. The ports authority announced on Telegram that the vessel was struck while it was en route to leave the port, but did not specify the extent of damage. The Ukrainian Navy said that one crew member was injured?in an attack on the "BULL", which had left the port and was headed towards the Bosphorus Strait. A statement posted on social media stated that the captain refused to assist and evacuate the injured person, and instead continued along the designated route. Odesa is the hub port for 90% of Ukraine's exports. In recent months, Russia has attacked Ukraine's maritime export arteries. This includes ports that are vital for the country's foreign trade, and its wartime economic survival. The 'attacks' on port infrastructure, which caused a spike in logistics and freight costs, have hurt local businesses. They are now forced to lower their prices so that they can remain competitive on the international market. (Reporting and editing by Sonali P. Paul, Philippa Fletcher, Anna Pruchnicka)
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Shares of UAE companies continue to fall as the Middle East conflict intensifies
The UAE stock exchanges fell on Thursday morning, continuing losses from the previous day after the reopening of the bourses following the two-day trading suspension triggered by Iran’s 'unprecedented barrage' of missiles and drones that targeted the Emirates. After a two-day suspension of trading, the?UAE stock markets opened on Wednesday following Iran's drone and missile attacks against the Gulf state. Investors waited to learn more about the extent of damage caused by the weekend attacks that hit airports, ports and residential neighborhoods in both emirates. Both exchanges have announced that they will temporarily lower the price limit on securities by 5%. The U.S. - Iran war intensified on Wednesday, after a U.S. sub sank a naval?vessel of Iran off Sri Lanka and killed at least 80 people. NATO 'air defenses' shot down an Iranian ballistic missile heading toward Turkey. Dubai's main stock index fell more than 4% as stocks declined across the board. Top lender Emirates NBD, and blue-chip developer Emaar Properties, both lost 4.9%. Air Arabia.DU>, a budget airline, also declined by 4.9%. Utility firm Dubai Electricity &?Water Authority grew by 4.4%. First Abu Dhabi Bank, the largest lender in the country, fell 4.9%, while?Aldar Properties dropped 5%. Abu Dhabi Commercial Bank was among the other banks to fall, with a?5% drop. Qatar National Bank, the Gulf's largest lender in terms of assets, rose 1.7%, bucking the trend. Qatar, the largest liquefied gas producer in Gulf, declared "force majeure" on Wednesday. According to sources, it may take a minimum of a month for production levels to return back up. Prices of oil jumped more than 3% on Wednesday, as fears grew over the potential disruptions in Middle East oil and natural gas supplies due to an escalating U.S./Israeli conflict with Iran.
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Russian drone strikes foreign cargo ship near Ukraine Black Sea port
The Ukrainian Sea Ports Authority reported late Wednesday that a Russian drone had damaged a civilian Panama flagged vessel transporting corn in the Black Sea Odesa area near the Ukrainian port of Cronomorsk. The port authority said that the vessel was struck while it was en route out of the harbor and that some crew members were injured. They did not specify the extent of damage or how many crewmembers had been injured. Odesa is the hub port for 90% of Ukraine's exports. In recent months, Russia has attacked Ukraine's ports and maritime export routes, which are vital for its trade abroad and the survival of its wartime economic. Attacks on port infrastructure, causing a 'jump in freight and logistics costs, have hurt local businesses. They are forced to lower their prices to stay competitive on the international market. (Reporting and editing by SonaliPaul; Anna Pruchnicka)
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Mike Dolan: ROI-Europe is able to absorb the Mideast energy shock, but not much else.
Europe is worried about an economic blow similar to the invasion of Ukraine in 2004. Initial fears could be exaggerated if futures markets are accurate. That's a very big "if". The European markets were shivering at the prospect of yet another energy crunch that would drive up inflation and sap demand. The soaring?oil price has hit the markets of major importing countries around the globe. Europe is particularly vulnerable to the resumption of disruptions in natural gas supply, which were already halted by Russia's invasion of Ukraine in 2022. Crude oil, although below the Tuesday peaks, is still more than 10% higher than last week. It's also at its highest level in over a year. European natural gas futures remain more than 50% higher than last Friday, and are also at levels from over a year ago. Money markets have begun to price in a small possibility of a rate hike, even though they have ruled out the probability of another European Central Bank rate cut. Benchmark 10-year government lending rates increased by more than 10 basis point? and euro stock indices fell up to 6%. Is it too much or only the beginning? All of this is put into perspective by a quick glance at the reaction to Ukraine's invasion. The six-month period following the February 2022 attack saw European?gas prices triple, ECB interest rates rise 100 basis points, German bund yields increase 135 basis points, the euro fall by 16% against the US dollar, and euro stocks plummet 22%. Not yet, at least. Expectations of inflation are not changing yet The gas price spike is nowhere near Ukraine's initial spike, despite Qatar's Wednesday halt to liquefied gas production after its installations and exports were blocked. The key difference is the way in which markets value long-term inflation expectations. In the seven months following the invasion of Ukraine, these expectations rose by 70 basis points to 2%. Even though the Iran attacks occurred only five days ago, expectations have barely changed. Most investors are firmly convinced that the energy shortage and conflict in the region is temporary and will allow prices to return to normal by the end of the summer. For what it's really worth, the Polymarket prediction market sees a 40% probability that the current Iranian government falls by mid-year. Energy traders see it as a time-limited shortage. Brent crude oil prices, for instance, are expected to drop by more than $10 a barrel before the end of the year, and return to their pre-attack levels. Prices of natural gas futures are higher for a longer period of time. The rates at the end-of-year are about $10 more than they were one month earlier. The gap will close within a year. Most economists are concerned about the economic impact of the war, but no one can really see it at this time. There are some key differences this time around. While ECB hawks may be wary of trying to "see-through" an inflation rise, as they did in the past, after the pandemic or in Ukraine, where many said central banks tightened too late in order to prevent steep price increases, there are also important differences. For a start, monetary and fiscal policies are?already tighter than they were then. The ECB was also at risk of a significant undershoot of its 2% target inflation over the 'next year. The economists at Deutsche Bank point out that the relatively small energy futures movements so far, and the undisturbed expectations of long-term inflation on the market are "more consistent" with eliminating the risk of inflation undershooting the 2% target than with overshooting. The ECB's baseline for inflation is still on target, but rising energy prices are muddying the waters. According to its "ready reckoners" or standard rule-of thumb models, the increase in geopolitical uncertainties this year could result in a 0.25 percent drop off of euro zone GDP. Geopolitical shock in 2022 knocked one point off the GDP. Europe is still vulnerable to the global energy market, not just in the Middle East, but also because of its heavy reliance on U.S. LNG during a period when trade and diplomatic relations between Washington are fractious. As it is, the system can probably take it on its chin. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Sign up for Morning Bid U.S., my weekly newsletter. You can also listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
GAIL, India's gas utility, is considering reducing its supply to customers following the Petronet LNG forced majeure
GAIL (India), a subsidiary of India's GAIL, said it would 'assess' reducing supplies to its natural gas customers after receiving a notice of force majeure from its long-term supplier Petronet LNG due to constraints imposed on vessels resulting from the escalation in conflict in the Middle East.
India's imports from Qatar of liquefied gas have been affected by the U.S.-Israeli war against Iran.
After some vessels were damaged by the fallout of the U.S. and Israeli?attacks against Iran, the transit of 'oil' and LNG through Strait of Hormuz has been brought to a halt.
GAIL announced that, as of March 4, the allocation of LNG to GAIL from Petronet has been reduced from a maximum of 0 tonnes.
GAIL said that LNG from other suppliers and sources is not currently affected, in a stock exchange statement.
Petronet LNG is India's largest gas importer. It issued a notice of force majeure to its supplier QatarEnergy and to local buyers such as GAIL and Indian oil?Corp after?its LNG tanks were unable reach the LNG loading facility at Ras Laffan.
GAIL and IOC have already reduced gas supply to industrial customers.
According to government statistics, India imported 27 million metric tonnes of LNG in 2024/25. This is about half its total gas consumption. Qatar is the largest supplier of LNG. Sethuraman N R; Tom Hogue, Editor.
(source: Reuters)