- FTSE 100 set to open down around 60 points
- Gas prices rise sharply as Russia closes Nord Stream 1
- Vistry agrees to buy fellow housebuilder Countryside Partnerships
Russia's decision not to resume gas flows through the main Nord Stream 1 pipeline to Germany has prompted a surge in European wholesale gas costs, intensifying concerns for supplies across Europe for the coming winter
The benchmark Dutch TTF October gas contract rose by 62 euros ($61.34), or 30%, to €272 per megawatt hours (MWh) in early trading, reversing losses seen last week..
The jump comes after Russia scrapped a Saturday deadline to resume flows following maintenance on the Nord Stream 1 pipeline, which runs under the Baltic Sea to Germany, historically supplied around a third of the gas exported from Russia to Europe.,
7.40am: Vistry agrees to buy Countryside in £1.25mln deal
The UK housebuilding sector is set for a shake up with news that Vistry Group (LON:VTYV) PLC (LSE:VTY) has agreed to buy Countryside Partnerships PLC (LSE:CSP) in a £1,254mln deal.
The deal, funded by cash and shares, will see Countryside shareholders receiving 60p cash and 0.255 of a new Vistry share for every Countryside share held.
The enlarged group has a strong strategic rationale and the potential for material value creation for shareholders, the companies said in a statement.
The enlarged group is targeting 40% return on capital employed in the short-term and expected to increase to over £3bn revenue per annum in the medium term,
Synergies of at least £50mln are seen from the combined business.
7.20am: Footsie set for a sticky start
Michael Hewson chief market analyst at CMC Markets UK said: “The late US weakness looks set to translate into a sharply lower European open as we look ahead to a big week for the European Central Bank, as they look to navigate a way through a crisis that could put the finances, as well as the borrowing costs of some of the weaker members of the currency bloc under huge strain.”
“Russia’s actions on Friday in indefinitely closing the pipeline could also see renewed upward pressure on European and UK natural gas prices when markets reopen today, after seeing big falls in prices last week as UK natural gas prices fell 39%, while European prices fell 33%.”
“Today’s other economic focus is set to be in the latest services PMI numbers for August.”
“The UK services sector is also feeling the strain but is still showing some signs of resilience at 52.5, although the weakness in the currency is making inflationary pressures across the sector that much worse.”
“Hopefully this weakness could well be close to ending now that the conservative leadership contest is finally over, as later today we get to find out who the next Prime Minister is likely to be, with all of the betting money expected to see the UK end up with its third female Prime Minister in Liz Truss, when the results are announced at 12:30pm today.”
“With the pound now below 1.1500 against the US dollar the new PM and the cabinet will need to set out how they intend to deal with the sharp rises in energy prices that are set to kick in next month, and without some form of government intervention to help with gas and electricity costs could see hundreds of businesses go to the wall.”
“We probably won’t find out any of the details today, but we could see VAT reductions, as well as possible reductions in business rates, as well as targeted measures for the most vulnerable members of society where energy makes up a much higher percentage of their monthly bills.”
6.55am: FTSE expected to open sharply lower
The FTSE 100 is expected to open sharply lower when trading resumes on Monday following the sharp falls in the US on Friday and news that Russia is suspending gas deliveries via the Nord Stream 1 pipeline indefinitely.
Spread betting companies are calling the lead index down by around 80 points.
The Dow closed Friday down 338 points, 1.1%, at 31,319, the Nasdaq Composite lost 154 points, 1.3%, to 11,631 and the S&P 500 slipped 42 points, 1.1%, to 3,924.
The benchmarks started positive but turned sour in the afternoon, clinching their third-straight week of losses. For the Nasdaq Composite, Friday was the sixth-consecutive losing day.
In London, the confirmation of a new Prime Minister will take centre stage with Liz Truss expected to be confirmed as Boris Johnson’s replacement while results from Dechra Pharmaceuticals (LON:DPH) are also due.