In this edition of Insight Weekly, we take a close look at Europe's energy crisis. After the loss of natural gas supplies from Russia, companies including BASF and ArcelorMittal have pulled back or stopped production, raising pressure on the European Union's manufacturing sector. Governments across the region have asked consumers to reduce energy consumption by 15%, resulting in gas storage levels at well above the targeted 80% ahead of winter. However, analysts say gas storage reserves could be almost completely depleted by the time spring rolls around next year if the winter is especially cold.
The trading desks of the largest U.S. and European banks will largely power their investment banking income after another strong quarter. In a sample of five U.S. lenders and eight from Europe, all but two posted double-digit year-over-year increases in their third-quarter income from fixed income, currency and commodities, S&P Global Market Intelligence data showed. Heightened volatility continued into the quarter, as well as elevated client activity, industry experts said.
For the first time in 30 years, price increases are set to outpace growth in current dollar holiday spending, according to S&P Global Market Intelligence economists. Real holiday sales are forecast to decline 1.2% this year, compared to a projected 5.8% increase in the prices of holiday goods. Inflation and the end of pandemic stimulus support have weakened consumers’ purchasing power. Retailers need to pull out all the stops to get customers to open their wallets this year as they also look to reduce elevated inventory levels.
- In Focus: Europe's Energy Crisis
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EU's vital manufacturing sector at risk as it weans off Russian gas
The outlook is bleak for much of the EU's industrial sector as the region's policymakers navigate a new energy path using alternative energy sources in the wake of Russia's invasion of Ukraine.
—Read the full article from S&P Global Market Intelligence
Energy crisis puts Europe on long, costly path to quit Russian gas
Europe without Russian gas was hard to imagine just a few months ago. Now that the taps are off, the region is set for years of higher prices and ongoing market interventions to ease the pressure on vulnerable households and industries.
—Read the full article from S&P Global Market Intelligence
Europe pins hopes on mild winter to avoid worse energy crisis in 2023
Industry experts say the worst effects of Europe's energy crisis might not materialize until next winter, when refilling gas storage reserves will be a challenge without Russian flows. Temperatures this winter will determine the scale of the task.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Trading to keep carrying i-bank income at big US, European banks after solid Q3
In a sample of five U.S. banks and eight from Europe, all but two posted double-digit year-over-year increases in their third-quarter income from fixed income, currency and commodities, S&P Global Market Intelligence data showed.
—Read the full article from S&P Global Market Intelligence
Margin expansion driving increases in US bank profitability
The net interest margin for the U.S. banking industry was the highest since the first quarter of 2020.
—Read the full article from S&P Global Market Intelligence
US banks double down on France, Germany but pull back from UK
U.S. banks continued to increase their footprint in France and Germany in the year to June 30. The U.K.'s position as the biggest European market for U.S. lenders ebbed further.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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MS&AD, Tokio Marine, Sompo aim to boost dividends despite expansive M&A agenda
The "Big Three" Japanese property and casualty players are on track to increase dividend payouts in the coming years even as they continue to boost overseas investment.
—Read the full article from S&P Global Market Intelligence
Credit and Markets
Short selling in US consumer discretionary stocks down from summer peak
The fall has generally coincided with inflation's retreat from its summer highs.
—Read the full article from S&P Global Market Intelligence
Mega-cap tech stocks underperform broader market as Fed hikes persist
The S&P 500 is down nearly 16% on a total return basis in 2022 but only 12% lower if excluding five large technology stocks.
—Read the full article from S&P Global Market Intelligence
Weekly Pricing Pulse: Commodity price growth returns
S&P Global's Materials Price Index increased for the first time since early October, with six out of 10 index subcomponents rising.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Consumer
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Nominal holiday sales up, real sales down
The pandemic surge in demand for goods is over and holiday sales growth in 2022 will not reach the levels seen over the last two years, according to S&P Global Market Intelligence economists.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy
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Surging US LNG exports to Europe heighten focus on US inflationary pressures
Liquefied natural gas exports are an increasingly important driver of U.S. demand, but experts still mainly attribute gas price movements in the U.S. to domestic supply and demand changes.
—Read the full article from S&P Global Market Intelligence
US energy storage wave builds strength amid delays
Developers added more than 1,200 MW of large-scale battery power capacity in the third quarter, tripling from a year ago, according to S&P Global Market Intelligence data. Despite delays, the near-term pipeline keeps surging.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Investing in lithium mines may shield EV makers from rising prices
Electric-vehicle manufacturers worried about climbing lithium prices may need to go beyond off-take agreements and play a more active role in the mining sector.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media, and Telecommunications
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AMC recovery strategy weighs on investor sentiment after tough Q3
Theater companies continued to weather a bumpy recovery through the third quarter. While investors rewarded Cinemark and IMAX on improving financials and domestic trends, doubt surrounded AMC's alternative investment strategies.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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The Week in M&A
Deal Profile: Washington Federal to acquire California-based Luther Burbank in $654M deal
Data Dispatch: New York Community secures approval for longest-pending bank deal since 2017
SPAC offerings, deals fall to pre-surge levels
Fintech M&A Deal Tracker: Banks regain their appetite for buying fintechs
Deal Tracker: US media M&A falls to YTD low as Activision deal under scrutiny
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The Big Number
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The Big Picture
What will shape your big picture in 2023? How will disrupted supply chains, inflation, and new sustainability and M&A trends impact your sector? Our 2023 Big Picture Outlook reports can expand your perspective and enable decisions with conviction.
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Written and compiled by Alex Virtucio
Article amended at 1:05 p.m. ET on Nov. 22, 2022, to remove Siemens from a list of companies that have pulled back or stopped operations after the loss of natural gas supplies from Russia.