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STOXX 600 down 1.3%
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Next, H&M drag retailers lower
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Porsche AG rises above IPO price
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U.S. stock futures slide
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A SEA OF RED, BUT CALMER WATERS? (1032 GMT)
After a short-lived boost on Wednesday, equity markets are a sea of red today.
The STOXX 600 is down 1.3%, wiping out a modest 0.3% gain on Wednesday that also saw the S&P 500 add 2%.
Despite continued declines in Europe today, the mood is markedly more more stable than in previous sessions, but there is a question over how long it can last.
UBS strategists don't believe the recent period of elevated volatility or risk-off sentiment will be over any time soon.
"For a more sustained rally, investors will need to see convincing evidence that inflation is coming under control, allowing central banks to become less hawkish. This turn, in our view, is still some time away," they said in a note.
They point out rising expectations of a 75 bps hike from the ECB next week, the probability that the Bank of England will have to become more aggressive to offset the inflationary implications of the government's fiscal policy and the fact that its bond purchase plans are only temporary.
War in Ukraine and threat to Europe's energy supply also factor into their scepticism for a cooling in market jitters, as well as Covid-related mobility restrictions in China.
So where are UBS strategists investing?
With several factors presenting headwinds to global growth, they are looking to the more defensive parts of the market that look able to weather a period of slowing economic activity.
"Within equities, this includes healthcare and consumer staples. In currencies, we like the Swiss franc. In fixed income, we favor high-quality bonds and resilient credits."
Income-yielding opportunities, such as high-dividend stocks with solid fundamentals, fixed income, volatility-selling strategies in FX and commodities, and real estate are also on their list.
They favour value stocks, and, despite the recent turbulence, they see the UK equity market and energy shares as appealing.
They also suggest investors diversify into hedge funds, as well as position themselves for the "era of security", as they anticipate energy, environmental, food and technology security to become long-term drivers of growth.
EXTREME NEGATIVITY: A BUY SIGNAL? (1022 GMT)
Moves across financial markets over the last 48 hours have been pretty wild, but with bearishness now reaching extreme levels, some are sensing a tactical opportunity
Among them are Bernstein's Mark Diver and Sarah McCarthy, who however still advise a degree of caution.
"Our Composite Sentiment Indicator (CSI) has just triggered a buy signal. Over the past 22 years buy signals have been followed by positive 4 week forward global equity market returns over 70% of the time," they write in their latest strategy note.
"We consider this signal as a potential short term tactical buying opportunity but remain cautious on equities over a medium term horizon," they add.
But Bernstein's is not the only signal flashing extreme negativity. The US put/call ratio has surged above 1 this month, a level rarely seen over the past decade, and individual investor pessimism has hit its highest since 2009.
(Danilo Masoni)
RETAILERS SINK (0910 GMT)
Remember the UK's cost-of-living crisis?
You'd be forgiven for having other matters at the forefront of your mind over the last week, as sterling tumbled and the Bank of England stepped in to stabilise markets reeling from last week's mini-budget announcement.
But a growing strain on consumers is continuing unabated in the background, with high-street retailer Next this morning cutting its sales and profit forecasts.
Shares in Next are down 8.8%, and Ocado and Currys are also notable UK retailers feeling the pain today, with shares down 7.1% and 5.1%, respectively.
The STOXX index of retail shares is the worst performing sector today, losing 3%. H&M shares are also down 2.2% today after the Swedish fashion retailer announced a cost savings plan.
Profit warnings in the sector are becoming a regular occurrence, said Russ Mould, investment director at AJ Bell writing in a note.
"This raises the prospect of other consumer-facing companies disappointing the market and next week we have three big names reporting: Tesco, Greggs and Wetherspoons," said Mould.
With soaring inflation and plunging consumer sentiment, the problems in the UK's retail sector were clearly present before last week's pivot in fiscal policy, but the ensuing depreciation of the pound complicates matters further.
Commenting in a note, Rosalind Hunter, partner at Simon-Kucher & Partners said Next's H2 forecasts reflect the difficulty in navigating the current environment faced by boards across the country.
"While their costs, mostly stated in US dollars, are now beginning to stabilise, the impact of the pound devaluing is clearly counteracting this. The statement is clear that the government’s next steps will be key in deciding their cost development and margin performance in H2."
Despite Next's downgrade, year-on-year profit is still set to rise, said Joshua Warner, financial markets analyst at City Index in a note.
"..that should be welcomed by investors considering online-only players Boohoo and ASOS have seen their bottom-lines collapse this year in the tough environment".
95% OF STOXX DOWN, PORSCHE AG RESISTS (0809 GMT)
Screens are flashing red. More than 95% of the STOXX 600 index is under water, all sub-sectors are down, and the pan-European equity benchmark index, last around 1.8% lower, is testing the late-2020 trough hit on Wednesday.
Retailers are top fallers, down 4.5%, also burdened by disappointing numbers from Next and H&M, followed by auto stocks, which are down over 3%.
With this selloff under way, it looks remarkable the Porsche has managed so far to trade above the IPO price in its Frankfurt debut after an offering priced at the top of the range.
UK stocks meanwhile are getting hammered as the BoE boost faded quickly. The FTSE 100 was down more than 2%.
Here's your snapshot.
EUROPE SET FOR SOFT START (0650 GMT)
European shares are set for a weaker start today as the boost provided by BoE's emergency bond buying move appeared to fizzle out less than one day after its announcement.
Euro STOXX 50, DAX and FTSE futures were last down around 0.3% following a sharp reversal in the previous day that took the STOXX 600 regional index off November 2020 lows.
The mood in Asia looked more constructive as equity benchmarks there played catch up with the strong rally on Wall Street. U.S. futures however fell in early European hours.
In corporate news, eyes are squarely on supercar maker Porsche AG's debut in Frankfurt after an IPO priced at the top of the range.
Investors will also react to solid-looking numbers from hotelier Accor and appliance maker Rational, while retailers H&M and Next saw their shars slide in premarket trade after downbeat updates.
In M&A, UK-listed microcap Attraqt is set for a big jump after a 30 pence cash offer from Crownpeak.
GILTY PARTY (0557 GMT)
The Old Lady of Threadneedle Street's cash tourniquet on the gilt market is holding, with the relief rally driving 30-year yields down a wild 105 basis points in a few hours.
Yet the remedy is little salve for a sinking pound, which has again been sold all day in Asia. Support at $1.084 was shortlived, parity beckons and hedge funds are lining up to profit from another leg lower.
Pricing for 125 basis points of rate hikes with a chance of 150 bp by November points to some hope in markets that the Bank of England does do more, and soon.
Officials David Ramsden (1130 GMT), Silvana Tenreyro (1500 GMT) and Huw Pill (1500 GMT) are slated to speak and will be closely watched.
But the whip hand is finance minister Kwasi Kwarteng's, since his has put fiscal and monetary policy at odds. He is due to make a speech at the Conservative party conference on Monday.
While markets have been so focused on British assets, the greenback is applying a full-court press.
Authorities in Japan have already sold dollars to support the yen. South Korea, India and Indonesia are also making various interventions to hold up markets. China's yuan is wavering ahead of a week-long holiday in China - an age in these markets.
Russia is about to annex a swath of Ukraine, a step to extending its nuclear umbrella over them. The EU suspects sabotage of gas pipes beneath the Baltic Sea. German inflation figures due at 1100 GMT offer a preview of Europe's numbers.
Asian share markets carried on Wall Street's bounce but in more muted fashion. The Hang Seng rose 1.2%.
Key developments that could influence markets on Thursday:
Speakers: BoE's Ramsden, Tenreyro and Pill; Fed's Bullard, Mester and Daly
Economics: CPI data in Germany and Spain, U.S. Q2 final GDP
