FirstFT: Europe’s energy crisis deepens as euro hits fresh 20-year low

Good morning.

The euro has dropped to a fresh 20-year low against the dollar after Russia’s decision to shut a major gas pipeline to Europe intensified the region’s energy crisis.

The common currency fell as much as 0.7 per cent to $0.988 in London trading, the lowest level since 2002. European stocks also fell, with the regional Stoxx 600 index down 1 per cent, Germany’s Dax off 1.7 per cent and France’s Cac 40 down 1.8 per cent. London’s FTSE 100 slipped 0.7 per cent.

In energy markets, Dutch TTF gas futures, the benchmark European contract, jumped 30 per cent to €272 per megawatt hour, rising back towards all-time highs hit above €340 just under two weeks ago.

European countries — including Sweden, Finland and Germany — scrambled over the weekend to respond to Russia’s “weaponisation” of energy supplies and offer financial support to businesses and consumers.

Liz Truss, who is expected to be confirmed Britain’s new prime minister later today, is expected to unveil a new package of measures to help families and business cope with soaring energy bills within days of taking office.

The latest spike in energy prices follows Russia’s decision on Friday after markets closed to indefinitely suspend natural gas flows through the Nordstream 1 pipeline, the main energy supply channel from Russia to European markets. State-owned Gazprom said the suspension was due to a technical fault.

Russia’s announcement came just hours after G7 countries announced plans to move ahead with a price cap on Russian oil exports in an attempt to reduce revenues flowing to Moscow that could be used to fund its war in Ukraine.

Line chart of Euro per dollar showing Euro hits two-decade low after Nord Stream suspension

Opec oil-producing countries and their allies are likely to look at ways to prop up oil prices when they meet today. The 11 per cent drop in oil prices last week has prompted a clamour from some Opec+ members to reverse policy after months of supply increases.

International benchmark Brent rose 1 per cent ahead of the meeting to $94.41 a barrel.

Thank you for reading FirstFT Americas. We hope you have a great week — Gordon

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The day ahead

American Labor Day Markets in the US will be closed today as the country observes a national holiday commemorating the works and contributions of labourers.

New UK prime minister named The winner of the Conservative party leadership contest will be announced later today. Liz Truss is widely expected to have beaten rival Rishi Sunak after weeks of campaigning. The winner becomes prime minister tomorrow and will travel to Balmoral in Scotland for a meeting with the Queen before taking office.

Lebanon presidential election The country’s parliament votes today to decide the next president for a term of six years.

What else we’re reading

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Inside the revival brewing at Starbucks The grassroots effort to organise workers at the coffee chain has spread to more than 200 stores. The momentum of the worker movement among Starbucks employees is emblematic of the more widespread resurgence of support for trade unions across the US.

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‘I got mooed at for expressing milk at Goldman Sachs’ Bully Market is a sensational account of sexual discrimination and harassment at Wall Street powerhouse Goldman Sachs. Jamie Fiore Higgins worked at the bank for 17 years and left in 2016 but her book has lessons for any powerful organisation. Three ideas stand out, writes Pilita Clark.

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