The European carbon market rose to an intraday high of €90.85/t during early trading on Thursday but failed to sustain its gains, closing nearly €1/t below the session peak. EUA prices declined by 1.34% on the day, marking their largest daily percentage drop in three weeks.

Carbon prices faced mounting downward pressure during the second half of Thursday’s trading session, coinciding with a sharp sell-off across global equity markets. The deterioration in broader risk sentiment appeared to be a key factor behind the reversal of earlier gains.

US equity markets experienced significant losses on Thursday, with S&P 500 companies seeing a reported record $2.9 trillion wiped off their combined market value. ING analysts described the sell-off as a “delayed reaction to the Democratic blue wave,” with technology stocks particularly affected.

The Democrats’ gains in the US midterm elections have also raised questions about the outlook for artificial intelligence infrastructure, particularly as several newly elected Democratic governors have advocated tighter restrictions or temporary bans on the development of energy-intensive data centers.

The concern is not necessarily opposition to artificial intelligence itself, but rather the potential for tighter regulatory constraints to slow the expansion of data center infrastructure, which has become an increasingly important driver of electricity demand.

The downward trend continued into Friday morning, with weakness across European equity markets adding to pressure on carbon prices. The benchmark EUA Dec’26 contract slipped below €88/t for the first time in almost two weeks, as broader financial market uncertainty continued to weigh on sentiment.

The opening of US equity markets later in the day could provide further direction for EUA prices, with the extent of any recovery or additional losses on Wall Street likely to influence trading sentiment during the afternoon session.

Ahead of Thursday’s market developments, analysts at ABN AMRO had maintained their forecast for EUA prices to average €86/tCO₂ in the fourth quarter and €80/tCO₂ for 2026 as a whole.

Nevertheless, the outlook for EUA prices remains highly uncertain, with yesterday’s trading session providing a clear example of how quickly market sentiment can shift in response to external developments.

 Key sources of uncertainty include political developments surrounding the upcoming EU ETS reform, weather-driven fluctuations in energy demand, European natural gas supply conditions, and the potential spillover effects of US political developments on global financial markets.