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The global energy crisis deepened on Tuesday as a further surge in natural gas prices in Europe and the US threatened to push some of the world’s largest economies into recession.
Gas markets in Europe jumped by as much as 10 per cent to as high as €251 a megawatt hour, equivalent in energy terms to more than $400 a barrel of oil, as traders raced to secure supplies ahead of the winter. Prices have more than doubled from already extremely elevated levels in June, although they eased marginally later on Tuesday.
The moves have followed Russia’s restriction on supplies in retaliation for western powers backing Ukraine after Moscow’s invasion. Traders are fearful of competition for seaborne liquefied natural gas cargoes with Asian utilities before the winter heating season. European politicians have accused Moscow of weaponising supplies.
With gas prices at more than 10 times their normal level, the possibility of a deep recession has grown, with investors now more downbeat on Germany’s economy than at any time since the eurozone debt crisis a decade ago.
European gas prices are expected to remain near record levels or head even higher as winter approaches, with Berlin discussing the possibility of rationing gas use and governments from London to Madrid preparing to subsidise punishing utility bills.
Thanks for reading FirstFT Asia. Here is the rest of the day’s news — Amanda
Five more stories in the news
1. Russia blames ‘sabotage’ for explosions in northern Crimea Moscow blamed “sabotage” for explosions in Crimea and claimed that Ukraine was behind covert attacks in mainland Russia. The rare acknowledgment provides possible evidence of Kyiv’s increased ability to strike deep behind enemy lines. Ukraine has not claimed responsibility for the attack but warned that Crimea would not be exempt from their attempts to repel Russian forces.
2. Walmart and Home Depot ease recessionary fears despite persistent inflation Two of the US’s largest retailers reported resilient consumer spending, helping ease recessionary fears amid rampant inflation. Walmart beat earnings expectations and forecast a smaller decline in full-year earnings than it had previously warned. Home Depot reported its highest quarterly sales and earnings on record.
3. Odinga rejects Ruto victory in Kenya’s presidential election Kenyan presidential contender Raila Odinga is taking legal steps to challenge William Ruto’s narrow election victory amid concerns of post-election violence. Odinga has until Monday to file a challenge for judgment. Despite some scuffles at the national polling centre, streets have remained mostly peaceful.
4. Liz Cheney braced for primary defeat after leading Republican charge against Trump Liz Cheney will probably lose the Wyoming Republican primary to a Trump-backed candidate. The daughter of former vice-president Dick Cheney was vice-chair of the congressional panel investigating the January 6 attack on the US Capitol. The primary contest is one of the last ahead of November’s midterm elections and serves as a new test of Trump’s grip on Republican voters after the FBI search of his Mar-a-Lago estate.
5. Harvard will offer free MBA tuition to lowest-income students Harvard Business School, one of the world’s most prestigious providers of business education, will waive annual fees of $76,000 for lower-income students. The announcement follows moves from other rich US universities to improve financial terms as tuition costs soar and students suffer under the burden of debt.
The day ahead
Nato holds crisis talks with Kosovo and Serbia Nato secretary-general Jens Stoltenberg will meet Kosovo’s prime minister Albin Kurti and Serbia’s president Aleksandar Vučić in Brussels today amid growing speculation of war between the two countries. Kurti and Vučić will hold talks with the EU’s diplomatic arm tomorrow.
Corporate earnings A number of companies will report their earnings today as we near the end of the current reporting season. Notably, Cisco Systems, Target and Tencent will release business figures today.
Economic data The UK will release July inflation data today. The country is currently grappling with a cost of living crisis as real wages fall at record rates.
Indonesian independence Indonesia celebrates Independence Day, marking 77 years since the country launched its revolution against Dutch rule.
What else we’re reading
How a banker fighting Hong Kong ban broke a Wall Street record AMTD Group’s Calvin Choi is riding high after a meteoric price rise within weeks of his company’s initial public offering in the US. The rise comes as Washington cracks down on Chinese companies listed in the US and as Choi faces a two-year ban by Hong Kong’s financial watchdog.AMTD Digital founder Calvin Choi, centre, rings a ceremonial bell on the floor of the New York Stock Exchange during an earlier IPO of a group company © Richard Drew/AP
EU digs for more lithium, cobalt and graphite in green energy push Europe wants to boost its supply of raw materials for clean energy as it seeks ways to end reliance on Russian oil and gas. The European Commission plans to lower regulatory barriers to mining and production of critical materials such as lithium, cobalt and graphite needed for wind farms, solar panels and electric vehicles.
Brazil’s other deforestation Deep within the country’s interior, the conversion of swaths of the once-inhospitable Cerrado region into pasture over the past few decades has helped transform Brazil into an agrarian powerhouse. But the extent of the encroachment is alarming ecologists concerned about threats to the region’s role as a carbon dioxide “sink”.
It is not always the perpetrator who pays In the wake of the #MeToo movement, economists are using real-world data to study incidents of everyday sexual harassment in ordinary workplaces. As with the rich and famous, they are finding that it is not always the perpetrators who pay a high price, with women more likely to switch jobs, writes Sarah O’Connor.
Anshu Jain, banker, 1963-2022 The first non-white, non-German to lead Deutsche Bank, Anshu Jain was known for his hard-charging style. He spearheaded the bank’s attempt to conquer Wall Street and faced cancer like he did professional challenges: by analysing the problem, trying to fix it, and then moving forward, Olaf Storbeck writes. Jain died on Friday.
Work and leisure
August is the traditional time for making yourself scarce at the office. So why are so many still working this month, asks Pilita Clark:
At first I thought I was the only one with an unexpectedly active office. But others in the city have the same problem. One friend who had his hopes of a quietly productive August dashed by office busyness blames the rise of hybrid working
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