"Europe Gaslit by Gas: A Matter to Watch"

Downward Pressure on This Month's Stock Market Likely to Come from Europe
Winter Approaches Amid Unresolved European Gas Issues
Leading Sectors Need to Be Found in Europe's Challenges

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Junho] An analysis has emerged suggesting that the European gas shortage crisis, rather than the strengthening of the US tightening stance, should be the focus as a negative factor increasing stock market volatility this month. It is expected that European policymakers will continue to face difficulties in finding solutions, and stocks that can benefit from Europe's bleak situation are predicted to emerge as leading stocks.

Lee Woongchan, a researcher at Hi Investment & Securities, said, "September is a month full of events, including the Federal Open Market Committee (FOMC) meeting," adding, "Since the US Federal Reserve (Fed) maintains control over inflation and the market, and the situation in the US has not worsened compared to June, I believe the stock market is unlikely to fall below the late June bottom."

Currently, US media outlets are suggesting the possibility of a third giant step (a 75 basis point increase in the benchmark interest rate) at this month's FOMC. However, the market has already priced in a rate hike close to 4.0%, and the US is managing to find its direction, the analysis stated.

The researcher emphasized, "The essence of this volatility lies in the European gas shortage crisis," and noted, the difficulty for European policymakers to find answers is the problem," predicting, "The winter of the fourth quarter this year will blow not in the US but in Europe."

Germany and the United Kingdom are proposing political solutions, but even if gas prices are controlled this way, it will be difficult to stabilize interest rates and exchange rates. Attempts to block the crisis through fiscal spending and controlled economies will only lead to inflation and fiscal deterioration. He advised, "The only option is to carefully monitor and respond to European interest rates, exchange rates, gas prices, and political events."

In this situation, the researcher said, "In addition to defense, electricity, and energy-related sectors, attention should be paid to industries with high energy and gas consumption that Europe is trying to reduce operating rates in," and forecasted, "Korean companies in refining, gas and nitrogen chemicals, automobiles and parts, steel and special steel, and precision machinery are expected to benefit."

This content was produced with the assistance of AI translation services.