Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolio

Marketmind: No respite from the R word

Published 08/24/2022, 01:23 AM
Updated 08/24/2022, 01:26 AM
© Reuters. FILE PHOTO: A person uses a petrol pump, as the price of petrol rises, in Lisbon, Portugal, March 7, 2022. REUTERS/Pedro Nunes

A look at the day ahead in European and global markets from Anshuman Daga

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.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

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.

Graphic: US vs Euro Zone Econ Surprises - https://fingfx.thomsonreuters.com/gfx/mkt/mypmnerzjvr/Two.PNG

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

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.