he global energy crisis continues to be the main focus for markets after a surge in UK natural gas futures deepened fears of significant inflationary pressures this winter.
The price remains above 300p a therm, or the oil equivalent of $200 a barrel. European markets have been spooked by developments, with the FTSE 100 index set to open lower today.
Supermarket giant Tesco offered some cheer for investors, however, reporting a big jump in half-year profits alongside forecasts for a better-than-expected financial year overall.
Holidays giant TUI is planning to tap shareholders for 1.1 billion euros (£937 million) in a fundraising that will help it refinance and pay back government loans.
The move follows an improved performance by TUI over the peak summer season, with more than 2.6 million customers booking a holiday in July and August. Bookings in the last few weeks in Germany and the Netherlands have also been above 2019 levels.
The fundraising, under which shareholders of the FTSE 250-listed company will be offered 10 new shares for every 21 existing shares, is fully underwritten and supported by TUI’s major shareholders.
TUI’s executive chairman Friedrich Joussen said: “We want to, we can and we will find our way back to economic strength. We are working on this relentlessly. The capital increase is a further step. We want to repay the government loans quickly.“
Barclays Bank Ireland, Bank of America, Citigroup, Deutsche Bank and HSBC are acting on the capital raise.
UK natural gas futures are continuing to rise at close to 330p a therm today, having surged to an all-time high yesterday in a deepening of the global energy crunch.
Brent crude was also at a three-year peak of near to $83 a barrel as global gas supply shortages force industry buyers to turn to oil instead.
The oil price has risen by more than 50% so far this year, but natural gas is now reported to be trading at an oil equivalent price of more than $200 a barrel.
The surge in natural gas — or “bit-gas” as one trader called it due to recent price similarities with cryptocurrency bitcoin — threatens to damage the economic recovery if it leads to a spike in inflation and then higher interest rates.
Deutsche Bank research analyst Jim Reid called yesterday’s move in the UK natural gas market above 300p a therm “astonishing”, noting that the 19.5% surge was the biggest daily percentage increase in over a year and represented an overall jump of 183.3% since the start of August. The situation was little different for European prices.
The main impact of higher energy prices appears be inflationary at the moment, rather than lower consumption or investment activity. However, analysts fear the longer the situation continues the greater the risk of some hit to economic output in the months ahead.
The Reserve Bank of New Zealand responded to rising inflation by lifting interest rates for the first time in seven years, making it one of the first major countries to reverse the support put in place during the pandemic. The move overnight had largely been priced in by traders.
Asian markets were lower overnight, with opening calls suggesting a weak session in the Europe. The FTSE 100 index is forecast to open about 45 points lower at 7,030, reversing the gains seen yesterday.