The start of the new stock market week on Monday was tantamount to a major setback.

The energy crisis, with gas prices continuing to rise, and concerns about interest rates due to bad news from the inflation front caused sharp price losses.

The German share index Dax fell by up to 2 percent and was down 2.3 percent in the early afternoon at 13,231 points.

The M-Dax of medium-sized stocks was even worse, it fell by 3.0 percent to 26,167 points.

Markus Fruehauf

Editor in Business.

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At the beginning of the week, fears of bottlenecks drove gas prices up further.

The European future rose at its peak by almost 13 percent to 289 euros per megawatt hour.

Dealers cited the announcement by the Russian gas company Gazprom on Friday as the cause, according to which Germany would again temporarily not receive any gas through the Nord Stream 1 Baltic Sea pipeline at the turn of the month.

According to Gazprom, pipeline operations will be suspended from August 31 to September 2 for maintenance work.

The worsening of the energy crisis weighed on the euro.

It lost up to 0.5 percent to $ 0.9988, falling below par with the American currency again.

Prices on the crude oil market came under pressure because investors expect the economy to weaken as a result of aggressive interest rate hikes by the US Federal Reserve.

Brent crude oil from the North Sea fell by up to 2.3 percent to $94.53 per barrel (259 liters).

The central bankers' meeting in Jackson Hole, USA, at the end of the week can provide information about the Fed course.

Fed chief Jerome Powell has recently remained conspicuously vague on the question of whether the Fed would continue to raise interest rates in the event of a recession if this was required by the inflation situation, Commerzbank analyst Ulrich Leuchtmann stated.

"If he wants to clarify this issue, Jackson Hole would be a good opportunity."

Double-digit inflation is imminent

Uncertainty was also caused by the Bundesbank, which in its monthly report for August expects the inflation rate to rise to 10 percent in autumn after the Federal Government's relief measures such as the 9-euro ticket or the tank discount have expired.

In addition, according to the Bundesbank economists, the risk of recession has increased significantly.

The gross domestic product (GDP) is likely to shrink in Germany at the end of 2022/beginning of 2023 due to the ongoing energy crisis, according to the monthly report on Monday.

"Due to the unfavorable developments on the gas market, the probability that GDP will decline in the coming winter half-year has increased significantly."

In an interview with the “Rheinische Post” at the weekend, Bundesbank President Joachim Nagel called for further interest rate hikes by the European Central Bank (ECB) so that medium-term inflation expectations can be kept at 2 percent.

This is also in line with the inflation target of the central bank.

With a view to the inflation rate, which may soon be in the double-digit range, Nagel clarified the historical dimension: "Double-digit inflation rates were last measured in Germany more than seventy years ago." According to the calculations at the time, the inflation rate in the fourth quarter of 1951 was eleven percent.

Gas and electricity prices weigh on companies

In the meantime, the increase in gas and electricity prices has reached a level that will have a significant negative economic impact - even without a complete cessation of gas supplies from Russia, the economists at the Swiss asset manager Bantleon warned.

In their view, many companies in the manufacturing sector are likely to reduce or relocate their production abroad as a result of skyrocketing energy costs.

According to calculations by Bantleon, private households in Germany could be deprived of around 70 billion euros in 2023 due to the higher energy prices alone.

This corresponds to around 4.0 percent of private consumer spending.

Companies are faced with cost increases of a similar magnitude as a result of higher gas and electricity prices.

Growing concerns about a gas shortage caused Uniper's share price to plummet by up to 11 percent.

The rising gas prices are increasing the pressure on the ailing energy company, which was therefore already dependent on state aid.

The shares of Uniper's parent company Fortum fell by up to 6 percent on the Helsinki stock exchange.