U.S. equities, not UK, the place to hide

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U.S. EQUITIES, NOT UK, THE PLACE TO HIDE (1235 GMT)

U.S. equity inflows amounted to $118 billion so far this year, against $57 billion bidding farewell to the Old Continent, with France, Germany and Italy equities hit the most, according to Barclays.

"Money is still being directed to the U.S., while EU and UK equities keep being sold," say Barclays strategists.

"FX dynamics look similar, with dollar demand not showing much sign of fatigue, while euro, GBP and JPY shorts are being raised," they add.

Europe’s state of affairs may simply scare off global investors as the looming threat of gas cuts and messy politics make equities across the continent "seem uninvestable for many", the UK bank says.

Notably, demand for China equities is also going strong.

The relative resilience of FTSE 100, which has been outperforming both STOXX 600 and S&P 500 this year, is offering little consolation.

The table below shows the FTSE return outperformance this year:

(Lasocki Boleslaw)

EUROPEAN AIRLINES OPTIMISTIC DESPITE STRUGGLES (1009 GMT)

European airlines are outperforming the wider market today, following results from low-cost airline Wizz Air.

Though Wizz Air's first-quarter operating loss jumped, revenue got a lift .

Shares in Wizz Air are up 8.4% and at the top of the FTSE 350, while shares in fellow airlines Easyjet and Tui are enjoying respective rises of 5% and 4%.

But the overall backdrop is anything but easy.

Airlines have been battling with rising fuel costs and airport disruption. And they still haven't fully recovered from a pandemic-induced demand depression.

For the week ending July 21, European flight activity was still 13% lower than what it was in 2019, according to a note from BofA analysts.

As for airport disruption, EasyJet earnings yesterday flagged a 133 million pounds ($160 million) hit in the three months to the end of June due to last-minute cancellations.

Although the company did predict less turbulence for the rest of the summer after it cut its schedule to tackle delays and last.

Despite the struggles, Bofa analysts expect material improvement in unit revenues for most airlines, supported by higher yields and loads.

"We look for details on the yield outlook and potential impact of disruption on costs and capacity over summer," they said.

BA-owner IAG and Air France KLM will both report results on Friday, with Bofa analysts forecasting positive operating profit for both.

EARNINGS LIFT EUROPEAN BOURSES (0829 GMT)

European shares are up, supported by a batch of strong earnings results, especially from tech companies.

The STOXX 600 index is up 0.3%, with risk-sensitive travel and leisure index leading the pack, jumping 1.2%.

Tech stocks climb 1.3% with shares in Worldline rising 14.3% to the top of France's blue-chip index CAC 40 after the French payment company reported first-half results above expectations.

Britain's Reckitt Benckiser and Italy's UniCredit also jumped on strong earnings.

Better-than-expected results at tech giants Microsoft and Google also helped steady a nervous mood in stock markets.

Europe's energy supply worries and expectations the Fed will hike rates by 75 basis point later today are capping the rally.

(Joice Alves)

FED DAY (0750 GMT)

A second straight 75 basis-point interest rate hike from the U.S. Federal Reserve later on Wednesday looks like a done deal.

After all, when markets started to bet on a 100 bps move after latest inflation data, Fed policymakers reacted with a concerted push back.

But it's not quite time to move along. What Fed chief Jerome Powell says about prospects for a September policy move will be watched closely, and could be the trigger for another bout of volatility in markets that have switched their attention to the slowing economy.

In the meantime, strong U.S. and European company earnings - notably better-than-expected results at Microsoft and Google -- have lifted sentiment. European shares have opened higher, Wall Street seems set for a firmer session and Asian markets fared well earlier in the day.

But watch what the CEOs are saying: Deutsche Bank after posting a 51% rise in second-quarter profit, was less optimistic about full-year prospects and warned about the economic outlook.

Also keep an eye on is Italy, where a surprise S&P Global decision to cut the outlook on Italy's sovereign credit rating outlook to stable from positive has sparked another selloff in bond markets. Key developments that should provide more direction to markets on Wednesday: - China's industrial profits rebound in June - Australian inflation speeds to 21-year high, peak still to come - Kenya's central bank meets - Germany June retail sales - Euro zone June money supply data - US June durable goods . - U.S. earnings: Invesco, Bristol-Myers, CME Group, Kraft Heinz, Boeing, Ford, QualComm. -Europe earnings: Airbus, Credit Suisse, Banco de Sabadell, Mercedes-Benz, Danone, Lloyds Banking Group, BAT, Rio Tinto, Deutsche Bank, EDP, Endesa, Wizz Air, Telecom Italia, GlaxoSmithKline, Poste Italiane, Carrefour, Moncler

(Dhara Ranasinghe)

EUROPEAN FUTURES UP AHEAD OF FED (0650 GMT)

European futures are trading higher after better-than-expected results at tech giants Microsoft and Google helped steady a nervous mood in stock markets ahead of a U.S. Federal Reserve meeting that is expected to deliver another big rate hike.

European futures and FTSE futures are comfortably in positive territory.

In the meantime, Italy's government bond yields rose in early trade, after S&P Global revised down its outlook on Italy's rating to stable from positive.

(Joice Alves)