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Lagarde Warns Europe and The Euro Weakens, Germany Restarts Coal Power Stations & Macron Loses Parliament Majority

Euro weakens, following Lagarde warning to Europe

The Euro was weaker on Monday, as ECB President Christine Lagarde issued a warning to the continent.

Speaking today, Lagarde said that “Risks to financial stability have perceptibly increased since the beginning of this year”.

So far, the European Central Bank has not moved to increase rates, however, has given forward guidance to do so in Q3.

This comes despite Europe facing an unprecedented inflation crisis, with a rise in energy prices the main culprit. 

Gas falls to 1-month low, as Germany restarts coal power stations

Natural gas prices slipped to a one month high to start the week, as it was announced that Germany would be restarting some of its coal plants.

Following news that Russia will be cutting back energy to Europe, Germany has moved to find alternatives.

On Monday, Europe’s largest economy stated that by restarting these coal plants, it hopes to reduce gas consumption heading into the autumn/winter months.

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Leader of the Green Party Habeck stated that, “That’s bitter, but it’s almost necessary in this situation to reduce gas consumption. We must and we will do everything we can to store as much gas as possible in summer and autumn”.

NGAS is trading at $6.66 as of writing.

CAC 40 higher, despite Macron losing Parliament majority

France’s CAC 40 index closed higher on Monday, despite President Macron losing his majority in parliament.

Macron’s centrist government lost control of the National Assembly, following a legislative vote on Sunday.

This now means that Macron could face challenges from the new opposition, which is broadly made up of left wing alliances.

The country’s Prime Minister, Elisabeth Borne stated that “The result is a risk for our country in view of the challenges we have to face”.

Many now expect Macron to seek to make his own alliances in order to regain a majority in the assembly.

 “In trading, you have to be defensive and aggressive at the same time. If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep the money.”

-Ray Dalio.

Eliman Dambell

Senior Market Analyst