Hiscox Share News (HSX)

AN OPPORTUNITY IN UNDERPERFORMING SECTORS (1129 GMT)

Equity markets have had a tricky first seven months of the year as high inflation, slowing growth, global central bank tightening and the war in Ukraine have made it a difficult place to invest.

On a relative basis, defensive sectors have performed best in Europe and the U.S., with telecoms, healthcare and utilities some of the better performing areas of the market year-to-date.

Commodity sectors have also performed well as result of strong commodity prices.

Looking forward, Richard Saldanha, equities fund manager at Aviva Investors, believes that opportunities for the rest of the year might lie elsewhere.

"Those sectors feel quite crowded, if I'm honest," Saldanha says.

"We think the opportunity is more in technology names, industrial names and consumer names, where share prices have de-rated a lot," Saldanha adds.

Saldanha notes that challenges remain in Europe given the uncertainty over gas supplies heading into the winter but the U.S. remains "relatively attractive", particularly some large-cap tech names, such as Google and Microsoft.

However, Saldanha refuses to turn his back completely on Europe and has highlighted some European companies with global exposure that could also provide value over the long-term.

"You can still find great global European businesses where the valuations are still relatively appealing," Saldanha says, providing Kering, Siemens, Schneider Electric and ASML as examples.

(Samuel Indyk)

HOW FAR CAN THE FED GO (1033 GMT)

While yesterday's remarks from Fed officials reminded investors that the U.S. central bank is probably not done with rate hikes, analysts are trying to assess how much Fed fund rates can diverge from Treasury yields.

After crunching some numbers dating back to the 90s, ING analysts find that the 10yr yield in the extreme has managed to trade 150bp through the funds rate.

The 10-year rate could also fall towards 2% while the Fed hikes above 3.5%, from the current 1.5-1.75%, they argue.

On the other hand, when the 10yr breaks below the funds rate, the funds rate itself tends to have peaked.

"Either market rates have overdone it to the downside and need to back up, or the Fed needs to start winding lower rate hike ambitions," ING analysts say in a research note.

"Or there is another option, where the Fed chooses to outright sell bonds to the market in an acceleration of its quantitative tightening agenda," they add. "An extreme option, but one that is there."

San Francisco Fed President Mary Daly cautioned there is still "a long way to go" to lower inflation from four-decade highs. At the same time, Cleveland Fed President Loretta Mester said the Fed has more work to do on interest rate rises as inflation has not even peaked yet.

(Stefano Rebaudo)

ITALIAN DRAMA: WILL FOREIGN INVESTORS MIGRATE ELSEWHERE? (0952 GMT)

Political uncertainty in Europe's No. 4 economy is back and with elections due next month, one key question is what foreign investors are going to do about their Italian equity holdings.

UBS sees them fleeing and with politics blurring the outlook for the county, it has downgraded Italy to neutral following a double upgrade back in November last year.

"Non-domestic investors own 30% of the total market cap of listed corporations in Italy and are likely to migrate to alternative markets where they can get similar rewards for relatively lower risk," say strategists at the Swiss bank.

"Our economists foresee more challenging times ahead for Italy, highlighting further increases in the country's debt, stagnated growth, rising interest rates as the ECB tightens policy, reliance on energy from Russia, in addition to political uncertainty," they add.

LACKLUSTRE OPEN AS GEOPOLITICAL TENSIONS AND EARNINGS BITE (0751 GMT)

It was a lacklustre open for European stocks as geopolitical tensions weigh on risk sentiment.

Some less than stellar corporate results didn't help matters.

Shares in industry giants Siemens, Hiscox and BMW are down between 5.4%-7.5% after posting results, dragging down European bourses.

Overall the pan-European STOXX 600 index is 0.2% lower, with autos down 1.4% and leading losses on a sector basis after BMW's warning that output will be lower year-on-year.

Commerzbank shares are up 0.8%, in a volatile day, after some upbeat results, and Societe Generale are up 4% after it reported a smaller-than-expected loss in the second quarter.

Tech is one of the biggest sector gainer, up 0.8%. In the UK, FTSE-listed cyber security Avast shares soar 42% on positive developments in its planned merger with NortonLifeLock .

(Lucy Raitano)

MARKETS' MOMENT OF TRUTH (0650 GMT)

Markets are dealing with dual flashpoints today on inflation and cross-straits tensions.

Fed speakers have put paid to market thinking they will lighten their inflation war while, across in East Asia, China has its warheads trained on Taiwan as Nancy Pelosi hails Taiwan's free society.

China furiously condemned the trip by the speaker of the U.S. House of Representatives, which marked the highest-level U.S. visit to Taiwan in 25 years.

Geopolitical tensions are simmering as China embarks on an unprecedented six days of military drills surrounding Taiwan. Risks of escalation are mounting, warn security analysts.

For Fed watchers, concerns of faster U.S. rate rises are back on the radar after St. Louis Federal Reserve President James Bullard said rates will need to be 'higher for longer' if inflation does not recede.

That came after a trio of Fed officials from across the policy spectrum signalled that they remain resolute on the need to make policy more restrictive.

Traders now see a chance of about 44% that the Fed will hike by another 75 basis points at its next meeting in September. Heightened rate expectations punctured a two-week rally in U.S. equity markets.

On the data front, a slew of services and composite PMIs of developed economies such as Germany, Eurozone, U.K. and the U.S. for July will be released across today.

In the U.S., durable goods orders are expected to grow 1.9% m/m in Jun from 0.8% in the prior month while factory orders likely slowed to 1.2% m/m in Jun from 1.6%.

Asian stocks are stuck in a narrow range on Wednesday, with Japan recovering from two-week lows while Korean and Hong Kong shares edged up.

Key developments that should provide more direction to markets on Wednesday:

Major earnings: Societe Generale, Infineon Technologies, Commerzbank, Yum! Brands and eBay

Key Asian data: July releases of the S&P Global PMIs for Hong Kong, Singapore and India and thee Caixin China Services PMI

(Anshuman Daga)

EUROPE WARY AMID BUBBLING GEOPOLITICAL TENSIONS(0635 GMT)

European future contracts are mixed this morning, with a flat open signalled for pan-European and German stocks while FTSE futures are down 0.25%.

Most of the market moving news is coming from outside Europe, with tensions still bubbling amid U.S. House Speaker Nancy Pelosi's visit to Taiwan, and a stream of hawkish comments from Fed speakers also weighing on sentiment.

Higher interest rates are coming through for banks, with Germany's Commerzbank swinging to a bigger-than-expected second-quarter net profit on Wednesday .

European services PMI will be released this morning for an important read on the health of the region's economy and how inflation is impacting demand.

(Lucy Raitano)