Afternoon relief rally in Euro markets fueled by Nord Stream

Strong gains and a 2.7% jump in Germany capped a highly volatile sign-change in euro markets, with buyers retaliating en masse shortly before the close on news that Russia intended to resume operation of the Nord Stream gas pipeline.

In particular, the pan-European Stoxx 600 closed with gains of 1.4% at 423.6 points, recovering from the daily low of 414 points, while the high capitalization Stoxx 50 moved even better, finishing at +2.17% at 3,588 units.

In the individual European indices, as mentioned above, the winner of the day was the German DAX with a mini-rally of 2.72% to 13,312 points, as the risk of running out of natural gas in the industry of Europe’s largest economy is removed.

In the same climate, the British FTSE 100 closed with a rise of 1.1% to 7,301 points, the French CAC 40 strengthened by 1.8% to 6,201 points, with an even better picture in the region, where in Italy the FTSE MIB recorded a rise of 2 .5% to 21,690 units and the Spanish IBEX 35 strengthened by 2% closing at 8,125 units.

The news of the day was reported in the afternoon by Reuters, which, citing people with knowledge of the matter who spoke on condition of anonymity, said natural gas flows through the Nord Stream pipeline would resume on time on Thursday after maintenance work was completed.

The pipeline, through which 1/3 of Russian gas exports to the European Union passes, had been shut down for work and there were fears that Moscow would not restore it.

A little earlier today, Mr Commissioner Johannes Hahn had declared that the European Commission does not expect natural supplies to continue through the pipeline when its planned maintenance is completed.

So optimism for a positive outcome of the new tug of war between the EU and Russia restored the positive mood in the ranks of investors, with shares moving strongly upwards, even though according to the publication the pipeline will return to only 40% of its capacity, as well before maintenance work.

In this climate, however, the title of Uniper, the natural gas manager in Germany, rallied almost 10%, while energy-sensitive sectors such as chemicals, steel and manufacturing moved strongly upwards in general.

For example, the German Siemens, Wacker Chemie, Thyssenkrupp and BASF SE, all moved with profits of more than 4%.

At the center of interest was also the nationalization of EDF with the French government offering €12 per share – a total of €9.7bn – to buy a 16% stake in the privately held company, and the company’s stock rallying almost 15%.

Elsewhere, eyes now turn to the European Central Bank’s meeting in Frankfurt on Thursday, with policymakers set to announce the first rate hike in 11 years but facing a backdrop of slowing economic growth amid Russia’s war in Ukraine and the consequent threats to energy supply.

According to a Reuters report, ECB members will discuss whether to raise interest rates by 25 or 50 basis points to tackle record inflation, with the former being the most likely scenario.