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EUROPEAN SHARES EDGE HIGHER IN EARLY TRADE (0735 GMT)
European shares have opened with slight gains on Wednesday, with the pan-European STOXX 600 continuing to bounce from its two-month low hit on Monday.
The STOXX 600 was last up 0.2%, as were Germany's DAX and Britain's FTSE 100. France's CAC 40 was higher by 0.5%.
Swedish Match topped the STOXX 600 for the second consecutive day, after Philip Morris launched a recommended $16 billion cash offer for the nicotine products maker.
Shares in Compass Group rose over 9% in early trade after the company raised its organic revenue guidance and said sales have returned to pre-COVID levels.
Bayer shares sunk to the bottom of the STOXX 600 after the Biden administration asked the U.S. Supreme Court to shun the company's weedkiller appeal.
Here's your snapshot at the start of Wednesday's trade:
(Samuel Indyk)
IS THERE LIGHT AT THE END OF THE TUNNEL? (0804 GMT)
Amidst the rubble of financial markets this week, investors can be forgiven for feeling pessimistic. But the newsflow over the past few hours has been encouraging.
For one, Chinese officials say half of Shanghai has achieved "zero COVID" status (though activity curbs remain in place for now). Second, U.S. President Joe Biden is considering eliminating Trump-era tariffs on China as a way to lower goods prices.
Then, a growing number of Federal Reserve officials pushed back on Tuesday against the possibility of 75 bps interest rate hikes. And finally, there are hopes U.S. consumer price data due later on Wednesday will show inflationary pressures are peaking.
All that has put U.S. stock futures firmly in the black and Asian equities have picked themselves up from near two-year lows. Chinese stocks rose as much as 2% .
Bond market inflation gauges too show signs of reduced stresses -- the 5-year, 5-year U.S. inflation swap, a measure of expected inflation over the five-year period starting five years from today, has slipped to 2.44%. That's more than 20 basis points off the nine-year highs reached late last month.
And 10-year U.S. Treasury yields are back below 3%, having risen to more than a 2-1/2 year high of 3.2% on Monday.
But the broader macro and geo-political backdrop remains formidable, with flows of Russian gas to Europe through a key transit point drying up on Wednesday
Morgan Stanley slashed its global growth forecast for 2022 to 2.9%, less than half of 2021's run-rate, citing the toxic cocktail of tightening monetary policy and persistent supply chain frictions.
Key developments that should provide more direction to markets on Wednesday:
U.S. consumer price data, due at 1230 GMT. Poll 8.1%, previous 8.5%
Central bank speaker corner: ECB's Lagarde, Nagel, Muller. U.S. Federal Reserve: Bostic
Philip Morris launches recommended $16 bln cash offer for Swedish Match
(Saikat Chatterjee)
EUROPE SET FOR POSITIVE START (0729 GMT)
European stock index futures are pointing towards a cautiously higher open on Wednesday, after a mixed close on Wall Street and with U.S. CPI data in focus for the day.
Futures for the pan-European Eurostoxx 50 are up 1.0%. German DAX futures are higher by 0.5% while futures on the FTSE 100 are gaining 0.6%.
German consumer prices, released at 0600 GMT, were an unrevised 7.4% higher year-on-year in April, while China's producer price index rose 8.0% year-on-year in April, the slowest pace in a year.
Focus will now turn to the release from the U.S. at 1230 GMT. The data are expected to show inflation eased to an annual rate of 8.1% in April, down from 8.5% in March.
Shares in Swedish Match will be one to watch at the open after U.S. rival Philip Morris confirmed it was making a recommended cash offer for the company for 106 Swedish crowns per share, or approximately $16 billion.
Germany's Bayer will also be in focus after the Biden administration asked the U.S. Supreme Court not to hear the company's bid to dismiss claims by customers who contend that its Roundup weedkiller causes cancer.
(Samuel Indyk)
