It has been a dramatic few days on the energy front since the markets closed on Friday.
First came the news that Gazprom is stopping gas to Europe indefinitely, which risks sending gas prices in Europe skyrocketing.
Then on Saturday, Prime Minister Magdalena Andersson and Finance Minister Mikael Damberg announced that the government will secure the electricity companies’ liquidity in the form of guarantees of hundreds of billions.
Two announcements that can both affect the markets this week, in different ways, according to the experts that TT spoke to.
— I can state that the government is doing this, among other things, so that the market does not panic after the Gazprom shutdown. What you fear is a total energy collapse this winter, with rampant prices from today’s level, says Christian Kopfer, commodity analyst at Handelsbanken.
That, in turn, would risk spilling over into the entire financial system.
“Then you try to calm down by saying that the state will guarantee the energy companies’ liquidity,” he says.
Gazprom stop “trigger”
The risk of spillover effects from the energy market to, among other things, the stock market increases as the energy crisis deepens, according to Kopfer:
— If the market becomes more and more worried about totally escalating electricity prices, from already unsustainable levels, it could cause panic in the financial markets, he says and continues:
— When it does happen, it can happen quickly. It is impossible to know what triggers it, but a Gazprom shutdown could be such a trigger, he says.
However, the fact that Gazprom turned off the gas did not come as a major surprise to the market, according to SEB’s equity strategist Esbjörn Lundevall.
“The stock market has already discussed a weaker economy to a large extent. But this negative news is probably still taken as a new blow to everything with exposure to energy prices in particular. How much depends, of course, on how electricity prices develop,” he writes in a text message to TT.
He believes that the security requirements for the electricity companies’ futures, which is what the liquidity guarantee is supposed to cover, are too technical a matter to have created any greater concern on the stock exchanges.
According to Torbjörn Isaksson, chief analyst at Nordea, the most important thing about the government’s crisis guarantee is the signal it sends.
“They want to signal that if other problems arise that can affect the economy, they will also take powerful measures to mitigate the potential negative effects,” he says.
Does not solve the basic problem
When it comes to the stock market, however, there are many other factors that influence more than energy prices, according to Isaksson.
— Not least the interest rate market and the economy. But everyone who in one way or another does business with the energy companies is obviously exposed to the risk, says Torbjörn Isaksson.
A liquidity guarantee also does not solve the basic problem that the supply of energy in Europe is lower than the demand. Christian Kopfer at Handelsbanken says that the prices are already unsustainable.
— And then we are not in the critical period, but it is when it gets cold. This is when the entire electricity system in Europe and the Nordics will be subjected to these enormous tests. This is when the lack of energy can cause the electrical systems to collapse, he says.