- European Stocks Sink as Trump Win Fuels Global Trade Concerns
The bearish sentiment that engulfed European equities in recent weeks is being vindicated after results of the U.S. presidential election showed Donald Trump will govern the region’s biggest export market.
That’s bad news for European companies that get most of their revenue from America, after they fell more than twice as much as those more dependent on the region in the past two months. The Stoxx Europe 600 Index lost 1.8 percent at 8:10 a.m. in London, led by declines in banks and automakers. The euro earlier rose as much as 2.5 percent against the dollar.
Spanish lenders Banco Bilbao Vizcaya Argentaria SA and Banco Santander SA, which have high exposure to emerging-market assets, lost at least 5 percent. Credit Suisse Group AG, which relies on the Americas for more than a third of its revenue, retreated 3.5 percent. Daimler AG dropped 5 percent, leading carmakers lower. Randgold Resources Ltd. jumped 10 percent as gold soared the most since the Brexit referendum. A gauge of health-care stocks posted the only gain among industry groups, with Novartis AG, Novo Nordisk A/S and Roche AG contributing the most.
A win for Trump is a further setback for a bloc that has had to contend with the U.K. secession vote, as well as doubts over the health of its lenders and the efficacy of central-bank stimulus. While those concerns hurt companies dependent on domestic demand earlier in the year — just as a strengthening U.S. economy helped buoy exporters — the tables turned in the past weeks amid angst that the outcome of the presidential election could damp global trade.
“A Trump win is expected to damage trade,” said James Butterfill, head of research and investment strategy at ETF Securities in London. He’s been in the office since 3:30 a.m. “Traders are already expressing their worries through a depreciating dollar, which is bad news for European companies. Another problem for Europe is that there’s a populist wave going on, and this adds momentum to that. It’s worrying because we have so many elections coming up over here.”
European companies get about 17 percent of their total revenue from North America, with those in Belgium, Ireland and Switzerland among the most exposed, Morgan Stanley estimated in May. Europe is also the only region in the world that gets the majority of its sales from overseas, making it particularly vulnerable to global economic and political risks and to currency fluctuations. A stronger euro makes European products less competitive abroad.
Here are the moves for the region’s major national indexes:
- Germany’s DAX Index lost 2.2 percent, led by Daimler.
- France’s CAC 40 Index fell 1.9 percent, led by Axa SA.
- The U.K.’s FTSE 100 Index slid 0.6 percent, dragged by banks and energy producers.
Through Tuesday, the Stoxx 600 had already lost about twice as much as the S&P 500 Index since a high on Sept. 5, while the region’s volatility gauge posted its second-longest run of gains on record. The European equity measure fell to a four-month low on Friday, completing its longest stretch without progress since 1994, amid a global selloff as the Federal Bureau of Investigation reignited controversy over Hillary Clinton’s e-mails. A subsequent second exoneration provided a fillip for the shares in the past two days.
A Goldman Sachs Group Inc. index of European firms that get about half of their sales from the U.S. declined 5.9 percent from the market’s peak in September through yesterday, compared with a drop of just 2.4 percent for a gauge tracking companies that mostly rely on Europe. European firms that sell to America have fared better than members of the domestic-exposed measure every year but one since 2008.
“The strong trading links and the fact that major European companies are pretty active in the U.S. make this a pretty significant outcome for stocks over here,” said Dirk Thiels, head of investment management at KBC Asset Management in Brussels. “A Trump win just injects uncertainty. We don’t know exactly what his plans are and to what extent he’ll be able to implement his policies.”
Goldman Sachs Revised Down Brent Oil Forecast for Q3 2021
Goldman Sachs Group, an American multinational investment bank and financial services company, has revised down its Brent oil price projection for the third quarter (Q3) of 2021 by $5 from $80 per barrel previously predicted to $75 a barrel following the surge in Delta variant COVID-19.
The investment bank predicted that the surge in Delta variant COVID-19 cases will weigh on Brent oil price in Q3 2021 even with the expected increase in demand.
However, the bank projected a stronger second half of 2021, saying OPEC+ adopted slower production ramp-up will offset 1 million barrel per day demand hit from Delta.
Goldman said, “Our oil balances are slightly tighter in 2H21 than previously, with an assumed two-month 1 mb/d demand hit from Delta more than offset by OPEC+ slower production ramp-up.”
The leading investment banks now projected a deficit of 1.5 million barrels per day in the third quarter, down from 1.9 million barrels per day previously predicted.
Therefore, Brent crude oil is expected to average $80 per barrel in the fourth quarter, a $5 increase from the $75 initially predicted and the bank sees 1.7 million barrels per day in the fourth quarter.
“The oil market repricing to a higher equilibrium is far from over, with the bullish impulse shifting from the demand to the supply side,” the bank said.
Goldman added that even if vaccinations fail to curb hospitalisation rates, which could drive a longer slump to demand, the decline would be offset by lower OPEC+ and U.S. shale output given current prices.
“Oil prices may continue to gyrate wildly in the coming weeks, given the uncertainties around Delta variant and the slow velocity of supply developments relative to the recent demand gains,” it said.
Oil Extends Gains on Thursday on Expectations of Tighter Supplies
Oil prices rose about $1.50 a barrel on Thursday, extending gains made in the previous three sessions on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.
Brent crude settled at $73.79 a barrel, up $1.56, or 2.2%, while U.S. West Texas Intermediate (WTI) settled at $71.91 a barrel, rising $1.61, or 2.3%.
“The death of demand was greatly exaggerated,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “Demand is not going away, so we’re back looking at a very tight market.”
Members of the Organization of the Petroleum Exporting Countries and other producers including Russia, collectively known as OPEC+, agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand.
But as demand was still set to outstrip supply in the second half of the year, Morgan Stanley forecast that global benchmark Brent will trade in the mid to high-$70s per barrel for the remainder of 2021.
“In the end, the global GDP (gross domestic product) recovery will likely remain on track, inventory data continues to be encouraging, our balances show tightness in H2 and we expect OPEC to remain cohesive,” it said.
Russia may start the process of banning gasoline exports next week if fuel prices on domestic exchanges stay at current levels, Energy Minister Nikolai Shulginov said, further signalling tighter oil supplies ahead.
Crude inventories in the United States, the world’s top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.
Inventories at the Cushing, Oklahoma crude storage hub and delivery point for WTI, however, has plunged for six continuous weeks, and hit their lowest since January 2020 last week.
“Supplies fell further by 1.3 million barrels to the lowest level since early last year, theoretically offering support to the WTI curve,” said Jim Ritterbusch of Ritterbusch and Associates.
Gasoline and diesel demand, according to EIA figures, also jumped last week.
Barclays analysts also expected a faster-than-expected draw in global oil inventories to pre-pandemic levels, prompting the bank to raise its 2021 oil price forecast by $3 to $5 to average $69 a barrel.
RES4Africa, Enel Green Power and the European Investment Bank Encourage African Youth to Find Green Energy Solutions to Community Challenges
The second Micro-Grid Academy Young Talent of the Year Award today acknowledged energy innovation from across Africa that can accelerate the green transition and improve economic opportunities.
Backed by the RES4Africa Foundation, Enel Green Power and the European Investment Bank the yearly competition encourages young energy entrepreneurs from across the continent to develop projects that expand enegy access, enable greater use of renewable eneryg and accelerate sustainability.
Young finalists from across West, East and Southern Africa presented their innovative ideas to expert judges from the RES4Africa Foundation, Enel Green Power and the European Investment Bank.
The 2021 edition of the Micro-Grid Academy Young Talent of the Year Award has arrived to its final steps. Today, the eight young African innovators selected as finalists out of nearly 50 applicants presented to the international public their disruptive projects for the first time. The presentation took place during the event Public Competition for the MGA Young Talent of the Year 2021 finalists, and represents a preparatory step for the announcement of the three winners, that will be held the 28th of September in the framework of the Precop26.
The three entities strongly believe that renewables and innovation will be the response to the climate changes and energy deficit that Africa faces. In this deeply needed path towards its just energy transition, the continent can and must rely on one of its most precious resources : its youth. With this joint initiative, RES4Africa, Enel Green Power and the European Investment Bank put together their efforts to support those young people from all Africa countries who are committed and motivate to create a real change in their communities.
These are the finalists identified by the selection committee, who publicly presented their project ideas and among which there are the three future winners:
• Adekoyejo Ifeoluwapo Kuye, 26 years old from Nigeria, introduced a project focused on a sustainable cold chain for food;
• Alex Makalliwa, 31 from Kenya, presented his initiative of electrical tricycles for heavy loads in Nairobi;
• Benson Kibiti, 34 also from Kenya, performed an overview on an PV-powered trolley for heating up food and providing power;
• Lucas Filipe Tamele Junior, 24 from Mozambique, focused on waste management, biofertilizers and biogas;
• Matjaka Ketsi from Lesotho is 28, and presented an initiative aiming at building solar-powered Learning Centres for rural communities;
• Shedrack Charles Mkwepu is instead 26 and comes from Tanzania: he designed a system that allows farmers to control irrigation and other soil parametres from a mobile phone;
• Carol Ofafa, 32 from Kenya, proposed the installation of a PV system for health facilities;
• Kumbuso Joshua Nyoni, 34 from Zambia, envision an integrated Water-Food-Energy model for PV power and a water pumping system.
The webinar benefitted from the presence of Salvatore Bernabei, President of RES4Africa and Head of Enel Global Power Generation, as well as of Maria Shaw Barragan, Director of Lending in Africa, Caribbean, Pacific, Asia and Latin America, European Investment Bank. They introduced the objectives of the MGA Young Talent of the Year Award, while reflecting upon youth’s impact on the just energy transition.
Moreover, after the finalists’ presentation, a final feedback was provided, with closing remarks, by Roberto Vigotti, Secretary General at RES4Africa Foundation, Carmelo Cocuzza, Head of Corporates Unit, European Investment Bank, and Silvia Piana, Head of Regulatory Affairs Africa, Asia and Australia Area at Enel Green Power.
“The ability to generate innovation will be a fundamental driver to pave the way for a transformation that goes well beyond the dynamic of the Energy sector” commented Salvatore Bernabei “We are here give voice and visibility to young talents, innovators, entrepreneurs promoting the best innovative ideas to stimulate socio-economic progress from within and free the creativity of the younger generations in designing the Africa of tomorrow”.
“Increasing energy access and enabling more sustainable energy use is crucial to unlock opportunities for communities across Africa. The finalists in this year’s Micro-Grid Academy Young Talent Awards all demonstrate inspirational and innovative thinking that combined world-class energy expertise with unparalleled understanding of local energy needs and all deserve to win. The European Investment Bank is pleased to join RES4Africa and Enel Green Power to support talented young innovators and encourage them to become green energy leaders of the future.” said Maria Shaw-Barragan, European Investment Bank Director for Global Partners.
RES4Africa Foundation (Renewable Energy Solutions for Africa) envisions the sustainable transformation of Africa’s electricity systems to ensure reliable and affordable electricity access for all, enabling the continent to achieve its full, resilient, inclusive and sustainable development. The Foundation’s mission is to create favourable conditions for scaling up investments in clean energy technologies to accelerate the continent’s just energy transition and transformation.
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