Barratt Developments Share News (BDEV)

STOXX 600 little changed

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BoE sticks by bond plan deadline

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Euro zone industry output soars

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U.S. stock index futures rise

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2022 SET FOR SHARPEST WEALTH DESTRUCTION SINCE 2008 (1233 GMT)

Global financial assets are on track to decline by more than 2% in 2022, the first significant destruction of financial wealth since the Global Financial Crisis (GFC) in 2008, an Allianz global wealth report said on Wednesday.

This follows a staggering 60 trillion euros ($58 trillion) increase in private wealth in the last three years, which amounts to adding two eurozones to the global financial pile, the researchers wrote.

"2022 marks a turning point," Allianz said.

"In real terms, households will lose a tenth of their wealth," in a year that saw the war in Ukraine hobble post-COVID recovery and fuel inflation, while central banks' monetary policy tightening squeezed economies and markets.

The outlook for recovery looks not so bright.

Allianz expects average nominal growth of financial assets to be at 4.6% until 2025, compared with 10.4% in the preceding three years, a sharp contrast to GFC that was followed by a swift recovery.

EUROPE Q3: NO SHOCKER BUT UNLIKELY TO SAVE THE DAY (1149 GMT)

The earnings seasons starts in earnest this week with big Wall Street banks kicking off the dances in the U.S. on Friday, followed by European companies in the coming weeks.

But what to expect from Europe Inc?

Barclays says favourable currency moves, a valuation de-rating and estimate downgrades have lowered the bar and even though Q3 may not be a "shocker" it's also "unlikely to save the day".

"Given weakening demand, a turn in the inventory cycle, and tightening financial conditions, we expect investors to focus on the quality of beats, particularly margins and cash flow resiliency," say strategists at the British bank led by Emmanuel Cau.

"Beyond the actual Q3 numbers, the tone of guidance will likely matter more. Companies have remained generally optimistic, contrasting with the worsening macro picture. But we think it is just a matter of time before corporate sentiment turns more cautious," they add.

The UK bank's EPS growth estimate of -8% for 2023 in Europe is well below consensus of +2%.

A STRONGER EURO? IT COULD DEPEND ON THE WEATHER (0933 GMT)

Some investors may still be hoping for central banks to start pivoting towards more dovish monetary policy, but, for now, the Federal Reserve and the European Central Bank still sound as hawkish as they get.

But there are significant differences. The U.S. is less exposed to the economic impact of the war in Ukraine given its energy-independence, which is not the case for Europe.

The Fed is less likely to soften its stance on monetary policy just because the economy slows, and it’s hardly surprising that the U.S. dollar keeps rising, leaving the euro still below parity.

Expectations for higher interest rates attract foreign investment, increasing the demand for and value of the currency.

As Commerzbank analysts put it, the single European currency remains at the mercy of the energy crisis and factors “hard to predict, such as the weather; just think of the question: how cold will the winter be?”

European electricity and natural gas prices are well above where they were this time last year, leaving consumers with the prospect of eye-wateringly high utility bills that could surge if the winter is a cold one.

However, the real game-changer would be whether European Union countries will be able to cap gas prices in such a way that it would mitigate the significant risks to the economy.

“We think that the ongoing discussion among EU members about price caps on energy prices is set to have broader implications than the ECB rhetoric at this stage,” ING analysts say.

“Lingering indecisiveness is not good news for the euro, and we still see downside risks into the September lows in EUR/USD (0.9540) this week,” they add.

The question of how and whether to cap gas prices is set to dominate a meeting of European Union countries on Wednesday.

STOXX 600 STARTS SIXTH SESSION OF LOSSES(0810 GMT)

The STOXX 600 is down 0.4% and into its sixth consecutive session of losses, failing to rally as indicated by earlier futures trading.

Despite the wider market paring some losses from earlier in the session, things have got worse for the real estate index over the first hour of trading and it is now down 2.7%, languishing as the worst performing sector. Banks aren't far behind, down 2.3%.

Shares in Britain's largest homebuilder Barratt Developments are down 7.9% after it flagged lower private reservations and said its annual outlook looked "less certain". Fellow homebuilder Persimmon is also suffering, down 5.4%.

Credit Suisse shares are providing a drag, falling 4.1% after reports after Tuesday's close that the U.S. Justice Department is investigating whether the bank continued helping U.S. clients hide assets from authorities.

Healthcare is the biggest gainer on a sector basis, outperforming the wider market and up 0.8%, while personal and household goods shares are also doing well, up 0.5% with positive results from LVMH boosting the index.

EUROPEAN SHARES SET FOR SMALL UPLIFT (0637 GMT)

Futures contracts are signalling modest rises at the open for European stocks, which have posted five straight sessions of losses.

Eurostoxx 50 futures are up 0.3% with DAX futures rising 0.37% and FTSE 100 futures slightly behind, up 0.25%.

As if the UK needed anymore unexpected news, data today showed Britain's economy shrinking by 0.3% in August from July, hit by weakness in manufacturing and by maintenance work which slowed the oil and gas sector.

The data dropped amid talk of the Bank of England being potentially willing to expand its emergency bond-buying programme beyond Friday's deadline if market conditions demanded it.

Perhaps signalling what's to come for luxury companies this earnings season, French luxury goods giant LVMH beat market forecasts in the third quarter, posting a sharp rise in sales as wealthy shoppers splashed out on fashion and Americans in Europe made the most of the strong dollar.

Not so positive news comes from Dutch health technology company Philips which flagged that its third-quarter core profit would drop around 60%, as its plagued sleep and respiratory care business fell in value.

THE NEXT THREE DAYS (0612 GMT)

Remember that 2010 movie starring Russell Crowe and Elizabeth Banks with a nail-biting end? Well, the Bank of England's Andrew Bailey has crowed, sort of making clear the Liz Truss government can't bank on it defending markets from the fallout of an ill-conceived economic revival plan for more than three days.

"You've got three days left now. You've got to get this done," Bailey said on Tuesday, referring to the pension funds.

Either they call Bailey's bluff or UK pension funds scramble to raise cash within that deadline, to fund their hedges after finance minister Kwasi Kwarteng's tax proposals sparked a bond rout and rattled global markets last month.

Adding to the confusion, the Financial Times meanwhile reported its sources say the BoE is prepared to extend its emergency bond-buying programme beyond the Friday deadline, if market conditions demand it.

That's unsettling for an already battered gilts market. UK monthly GDP data will also give investors clues on the health of the nation at a time when shoppers stock up on electric blankets and energy-sufficient cookers ahead of a tough winter.

Meanwhile, the U.S. dollar is up, yen is at 24-year lows, yields are soaring, sterling is wobbling and oil is slipping. And all this as investors anxiously await U.S. inflation data this week that will likely portend more interest rate hikes by the Fed.

With yen at 146.21 per dollar, surpassing the levels that saw Japanese officials stage their first yen-buying intervention since 1998 on Sept. 22, the country's Chief Cabinet Secretary Hirokazu Matsuno said Japan was closely watching foreign exchange moves with a high sense of urgency.

Not all is lost for the chip industry that has been hammered in the past few days after a Reuters report on Tuesday that the U.S. government has allowed at least two non-Chinese chipmakers operating in China to receive restricted goods and services without their suppliers seeking licenses.

That comes days after a sweeping set of export controls published by the Biden administration aimed at cutting China off from certain semiconductor chips made anywhere in the world with U.S. equipment.

Key developments that could influence markets on Wednesday:

Economic events: UK monthly GDP, euro zone industrial production, US PPI and Fed minutes

Speakers: ECB's Christine Lagarde, Federal Reserve Bank of Cleveland President Loretta Mester, BOE's Andrew Bailey and Huw Pill set to speak at different events (Ankur Banerjee) *****