The end of this business week will be marked by a rather low amount of economic activity, at least as far as fundamentals go.
In Europe, there is still a European Council meeting going on. The energy crisis remains the key issue this week, amid the arrival of the colder months of the year.
Europe depleted more of its natural gas supplies during the previous heating season, and with disruptions to supply from Norway and the United States, it has had to rely solely on Russia for its energy needs.
Russian President Vladimir Putin has stated that if the European Union approves of Nord Stream 2, a second pipeline into Europe, the region will be quickly resupplied with plenty of natural gas.
However, the EU has long tried to avoid becoming too reliant on Russia for its fuel. In addition, Nord Stream 2 does not pass through Ukraine, which Europe has vowed to support. Ukraine and Russia are technically at war at their shared border and EU officials fear that if Nord Stream 2 starts working, Russia can completely shut off supply to Ukraine, in which case the EU needs a contingency plan to divert some of its own gas towards the country.
Thus, much of the energy crisis in Europe is rooted in politics and a battle for influence, especially where Ukraine, a buffer state between the EU and Russia, is concerned.
Fundamental data from the European Union today included a disappointing balance of trade for August for the eurozone, which was just 4.6 billion euros, or almost four times less than forecasted.
The trade balance of Italy was also quite low, and its September inflation rate failed to meet investors’ expectations.
Later today we expect several reports from the United States. These include retail sales for September (the forecast is -0.7%) and the Michigan consumer sentiment preliminary survey for October.
Another development in the US today is that the Securities and Exchanges Commission is going to allow trading ETFs of Bitcoin in the future. Nevertheless, this would in effect allow people to trade Bitcoin futures, rather than the cryptocurrency itself. Still, it rallied on this sign of acceptance and is currently sitting at just under $60,000 in value.
US stock indices today will trade marginally higher, after the markets embraced the somewhat disappointing PPI data from the US yesterday. Goldman Sachs will report its Q3 earnings today, continuing the streak of bank data from earlier this week.
In the commodity markets, the energy crisis continues to drive prices upwards. Crude oil is trading at its highest level in seven years, with the Brent crude at $84.70, and the WTI at $82 per barrel today. Natural gas prices also remain high, and coal is moving up as well.
