The Day at a Glance | Sep 5 2022

The Top

*Gazprom once again suspended its flow of natural gas to Europe through the Nord Stream pipeline, after sanctions were approved by G-7.

*OPEC+ proposed reducing crude oil production in 100 thousand daily barrels; Russia backs the proposal.

*Consumer confidence in Mexico decreased slightly during August (40.9) and remains at its lowest levels since the start of 2021.

*China extends quarantine in Chengdu due to COVID-19 persistence.

*Liz Truss chosen as conservative party leader in the United Kingdom; this makes her the new Prime Minister.

*Chileans reject new, progressive constitution.

*The Chinese Yuan`s depreciation could put downwards pressure on other emerging currencies: Bloomberg.

*Fitch warns about the high risk of local debt default in Sri Lanka.

Economic environment

Energy crisis in Europe. Natural gas prices in Europe have once again logged increases on Monday (30%) after Russia`s Gazprom announced that it will not resume the supply of the commodity to the continent through the Nord Stream pipeline this week; after recent maintenance works were completed on Saturday. The company has not given any exact dates for its reopening and high prices have revived concerns of a recession in Europe. The German government announced a package worth 65 billion dollars on Sunday – in order to avoid the gas shortage to impact consumers through high prices; Finland and Sweden announced plans to guarantee liquidity for companies in charge of providing power. Natural gas prices in Europe have increased 400% in the last year. Gazprom`s actions were carried out days after the G-7 announced price caps on Russian supplied oil as a sanction for the war in Ukraine. The Kremlin warned that there would be retaliation. EU Ministers will discuss emergency measures that would allow the region to get through winter with a low supply of energy. In addition to the increasing natural gas prices, there are new upwards pressures on gas prices after OPEC+ members thought about decreasing global crude oil production in 100 thousand daily barrels starting in October. Said proposal is backed by Russia and other members of the organization. Lastly, the ECB will make a monetary policy decision this week. The central bank is expected to increase rates more aggressively given high levels of inflation and the risk of greater pressures due to the conflict in Ukraine. High prices and rising rates threaten to push Europe`s economy into a recession. The Euro has weakened.