Welcome back from the nightmare that was 2022.

To recap:

Big, dumb war.

Energy prices go crazy. Inflation is not transitory.

Central Banks go to work, tightening.

Inflation led by higher energy costs gets worse.

June has a bit of a stock crash led by tech which is now just, ewww, total trash.

Fast forward last week:

Wall Street ends with its worst calendar year performance since the GFC in 2008.

The benchmark S&P 500 is about 20% smaller. The Dow Jones Industrial blue-chip index is about 9% lower.

And the most average average of all is the tech-heavy Nasdaq which lost a full third of its value with an unriching but mathematically convenient 33% drop for the year.

After nigh-on 3 easy-as years of straight, stonking gains, global markets touched the outer atmosphere and came tumbling came back to earth in a crap year for many.

To the olde country

European stocks ended lower last week, as they did often in 2022 but, like the ASX, they posted their worst annual performance since 2018.

That’s not too bad considering Wall Street’s Year of Shame and the fact that there’s a big, dumb winter war on their doorstep, a power crisis, a slowing economy, crazy-pants surging inflation and all-round, possibly co-ordinated and certainly aggressive central bank tightening with Christine Lagarde at the wheel, it doesn’t seem done by a longshot.

To markets

The Stoxx Europe 600 Index closed the last session of 2022 with a 1.3% drop, taking yearly losses to 13%.

Volumes were lighter than average last week as the French gave up and the UK and German markets closed up shop after lunch on Friday.

The FTSE 100 enclosed 2022 with a sneaky annual gain of almost 1%. That was well done. Certainly when compared with the rest of us and OFC the DAX next door – Index slumped 12%.

That slide was peanuts compared to Germany’s MDAX – which tracks the market’s next tier of market cap, mid-sized industrials, (or the mid-caps).

Those losses doubled compared to the daddy DAX, during a year of incredibly high energy prices.

DAX, MDAX and FTSE 100 comparison over 12 months to Jan 1.

Via Google Finance

The CAC 40 Index lost 9.5% last year to close at 6473.76, that’s its biggest fall (in points) since the GFC of 2008 and it’s worst in percentage terms (like us) since 2018.

Eek. Just imagine the bloodletting if the CAC 40 hadn’t gained a huge 12.5% this quarter (see September/October below!)

That’s the French CAC (top) 40 in 2022

Via lesechos.fr

So in tweet-length summation – round the ground, rising interest rates have yet to throttle inflation, nor calm overheated economies.

There’s equal worry-weight on inflation, recession and central banks tightening too much or too late.

Gas crisis? What gas crisis?

And now for the good news out of Europe, where crazy hot winter weather has helped ease natural gas prices here to levels unheard of since Russian President  V Putin went ahead and invaded Ukraine anyway.

The EU benchmark contract  – a Dutch thingy whose acronym is like … (DTTF?) has literally bottomed out over Xmas to return to around 78 euros per megawatt hour (MWh), which was last seen in February 2022 — just as those Russian units were amassing along the Ukrainian border for a training exercise, then a ‘special military something’ and finally a poorly executed but now full scale invasion of  Ukraine.

Front-month natural gas futures on the Dutch Title Transfer Facility (TTF), the benchmark contract in Europe, plunged in recent weeks to bottom out below 77 euros ($81.91) per megawatt hour.

There’s totally a heat wave in this European winter,  a welcome, if likely to be brief respite for gas prices which, at their mid-year peak stood alarmingly at 345 euros MWh as Putin’s weaponisation of the EU gas supply helped drive demand in a hot summer.

It might not last, but this is the kind of turn around headline which makes a window of negotiation less absolutely impossible.