European stock markets tumbled into the red on Wednesday as Russia’s threat to cut gas supplies deepens the energy crisis across the continent.
In London, the FTSE 100 (^FTSE) fell 0.4% after opening, while the CAC (^FCHI) tumbled 0.5% In Paris, and the DAX (^GDAXI) was 0.6% lower.
Gazprom has now confirmed it has turned off the taps to Poland and Bulgaria from Wednesday as they had failed to pay in roubles, saying that supplies will be halted until payment has been made.
The Russian president has ordered so-called “unfriendly” nations to pay for gas in its home currency, however, the EU has resisted as such a move would breach sanctions.
Poland has since said it would accelerate the building of its new floating liquefied natural gas (LNG) terminal in response.
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European gas prices surged as much as 24% on the day amid fears the move could be a precursor to Putin turning off the taps for the rest of the bloc.
Dominic Raab, UK deputy prime minister told Sky News: “It will have a very damaging effect on Russia as well because it is becoming further and further, more and more, not just a political pariah, but an economic pariah.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown: “Energy is being increasingly weaponised as the war in Ukraine looks set to enter the long haul and expectations grow that a crude oil embargo will end up being slapped on Russia by the EU. For now the tit for tat retaliation centres around gas supplies.”
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Across the pond, S&P 500 futures (ES=F) were up 0.2%, while Dow futures (YM=F) rose 0.4%, and Nasdaq futures (NQ=F) were 0.2% higher as trade began in Europe.
Tuesday’s market weakness was led by the Nasdaq, which slid to its lowest levels in over a month, while the Russell 2000 posted its lowest daily close since December 2020.
Senior market analyst at Oanda Jeffrey Halley said: “The Nasdaq led the equity market wipe-out overnight, with its near 4% retreat led by Tesla (TSLA), which fell by 12.2%. You could look at it two ways.”
“Either Elon Musk sold his latest stock awards to generate the $21bn in cash for his part of the Twitter (TWTR) buyout, or the street is starting to wonder how he could possibly effectively run Tesla, Starlink, Space-X and Twitter simultaneously.”
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Asian markets were mixed on Wednesday following a rout on Wall Street overnight.
In Japan, the Nikkei (^N225) fell 1.2% while other key markets pushed higher.
The Hang Seng (^HSI) rose 0.3% in Hong Kong, and the Shanghai Composite (000001.SS) advanced 2.5% after a report that Chinese president Xi Jinping had committed to boosting infrastructure spending.
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