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EUROPE ON THE BRINK? (1132 GMT)
European markets are under pressure, with the benchmark STOXX 600 buckling down 1.5% so far this month under the triple threats of energy risks, surging inflation and tighter monetary policy.
That comes off of a rally of 7.6% last month. What changed? Profit-taking and an unpleasant environment for equities, analysts say.
"The market is taking profits after a rally, but the outlook is difficult - we have interest rates and bond yields going up into a very challenging growth environment over the next six months for Europe," said Graham Secker, Morgan Stanley's chief European equity strategist.
"Euro zone GDP growth is going to turn negative over the next one to two quarters, and (the energy crisis) is creating dramatic stagflationary conditions, putting upward pressure on inflation and downward pressure on growth," said Secker.
The continent may already be in a recession, some analysts believe.
"The situation is bleak compared to what we thought we'd be looking at the start of the year but also compared to the challenges in the U.S. and Asia... European economies are already in a recession, we're just waiting for the data to confirm that," said HSBC Asset Management's chief global strategist, Joseph Little.
The euro and pound have struggled of late on concerns that an energy shock makes it more likely that the region will fall into a recession. Where does that leave central banks?
"The lower pound could be seen as a positive for exporters, but on the other side, imports are getting more expensive, adding pressure on the Bank of England to act. However, right now, inflation is the more emergency issue for the BoE," said Roland Kaloyan, equity strategist at Societe Generale.
The good news? Things might start to look better beyond the dreaded winter.
"As we move to spring, things may get better for Europe - equities continue to look unloved, under-owned and undervalued by investors... It's the most well forecast recession of all time, so we don't want to be too bearish at this juncture," said HSBC's Little.
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A FTSE RESHUFFLE IS COMING (1045 GMT) London Stock Exchange-owned index provider, FTSE Russell will announce its quarterly reshuffle of the FTSE-100 index next week.
It is very likely Abrdn and Hikma Pharmaceuticals will be demoted, FTSE Russell anticipates. Shares in Abrdn and Hikma are down around 40% since the start of the year.
The actual review of the FTSE UK Index Series will be conducted using data as the market close on Tuesday 30 August 2022.
"Changes to big indices like the FTSE 100 have become more important as the money tracking them has surged," says Ben Laidler, Global Markets Strategist at eToro.
The amount invested in global exchange traded funds (ETFs) has almost doubled to $9.1 trillion just since 2018, he notes.
Most likely, ConvaTec Group and F&C Investment Trust will be promoted from the mid cap index to the blue-chip FTSE 100.
(Joice Alves and Sam Indyk)
STOXX SLIPS TO ALMOST MONTH LOW, RECESSION FEARS WEIGH(0745 GMT)
European stocks are falling for a fourth consecutive day amid renewed recession fears and soaring European gas prices.
Investors are also nervous about the scale of problems in China's property sector, and likely hawkish messages from both the Federal Reserve at this week's Jackson Hole symposium, and the European Central Bank in its minutes due on Thursday.
The pan-European STOXX 600 is down 0.5%, trading at its lowest in almost a month.
Benchmark gas prices in Europe have tripled in a little over two months as a winter of unreliable energy supplies from Russia looms.
Russia will halt natural gas supplies to Europe via the Nord Stream 1 pipeline for three days from Aug. 31 to Sep. 2.
In terms of sectors, retailers and miners are struggling the most.
(Joice Alves)
NO RESPITE FROM THE R WORD (0650 GMT)
Recession worries are once again haunting markets.
With euro zone business activity contracting for a second straight month in August, though slightly less than expected, investors are not in any mood to price in a potential upside.
Surveys on Tuesday showed that the global economy is increasingly at risk of sliding into recession, with consumer spending held hostage to soaring inflation and rising global borrowing costs.
Those looking for some kind of silver lining could -- maybe -- find it in remarks from European Central Bank board member Fabio Panetta, who pointed out on Tuesday that a recession would mitigate inflationary pressure.
The ECB has only increased rates once, back to zero.
In the United States, a cocktail of a red-hot labour market and rapid price rises means the Fed remains primed to keep on hiking rates even if growth takes a hit.
On Wednesday, Asian equity markets fell for an eighth straight session, while the euro remained under pressure and near a two-decade low of $0.99005.
Investors, who have been building up expectations of the Fed taking a less hawkish stance, now expect it to reinforce its pledge to bring inflation down with the focus squarely on chair Jerome Powell's speech the annual central bank gathering in Wyoming this week.
Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday his biggest fear is inflation will be more persistent.
And just as Europe seeks to ditch Russian imports over Moscow's invasion of Ukraine, Norway's energy minister said the country aims to retain its current high gas production level until the end of the decade.
After repeatedly striking new records, the price of European gas has nearly tripled this year.
On the corporate front, it seems there's no end to the stand-off between HSBC and its largest investor, Ping An Insurance Group.
A senior executive from the Chinese company defended its call to spin off HSBC's Asia business, saying it cared about investment returns from its large stake in the bank.
Key developments that could influence markets on Wednesday:
Economic data: U.S. durable goods
Riksbank deputy governor speaks at DNB bank event, Iceland interest rate decision
(Anshuman Daga)
STOXX 600 SET FOR FOURTH DAY OF DECLINES (0640 GMT)
European futures are falling pointing to a start of the day with declines for bourses across the region as investors nervous amid a gas crisis and bracing for a hawkish message from the Federal Reserve at this week's Jackson Hole symposium.
The pan European stocks index STOXX 600 is set for a fourth consecutive daily decline as a winter of unreliable energy supplies from Russia looms.
The benchmark gas prices in Europe have tripled in a little over two months.
In the U.S., Minneapolis Fed President Neel Kashkari was the latest official to reiterate the Fed's focus on controlling inflation ahead of all else, and traders expect something similar from Fed Chair Jerome Powell who speaks from Wyoming on Friday.
In China, meanwhile, property stocks struggled as earnings brought another reminder of the deep hole that developers are in without access to easy credit. An index of Hong Kong listed builders fell 2.5% to a 10-year low.
Today looks set to be a quiet day in terms of economic data. Investors are focusing on the start of tomorrow’s Jackson Hole Symposium.
(Joice Alves)
