A look at the day ahead in European and global markets from Anshuman Daga:
Is it really good news? Probably yes, probably not.
Economies from the United States to Germany to Britain are showing an unexpected pick-up in business activity, but markets are again giving a thumbs-down to these indicators.
Just as inflation once again becomes the biggest pain point for investors after they conveniently put away such worries last month, strong growth cements the case for higher interest rates.
Fed funds futures traders are now pricing for the Fed's benchmark overnight interest rate to reach 5.36% in July and end the year at 5.18%.
And financial markets now point to a 95% chance of an increase in the Bank of England's official rate next month, up from 90% early on Tuesday.
That is depressing the mood for equity traders.
Asian stock markets floated in a sea of red on Wednesday following an ugly sell-off on Wall Street.
Ten-year U.S. Treasury yields rose to 3.966%, the highest since November. The dollar and sterling strengthened on expectations of further rate hikes.
Inflation data from Germany and Italy due later on Wednesday will offer clues on price pressures.
In this risk-off environment, the stage is set for the release of the minutes of the Fed's meeting from last week.
Markets will scrutinise it for signs on how high officials project interest rates will go following recent data that showed stronger-than-expected U.S. employment and consumer prices. (Graphic: Duel of the Rates, https://www.reuters.com/graphics/BRV-BRV/byvrlqoyyve/chart.png)
Political tensions are also heating up as President Joe Biden and Russian President Vladimir Putin spar verbally, presenting starkly different views of the world and the Ukraine war.
China said on Wednesday that its top diplomat, Wang Yi, met Russia's security chief and both sides agreed that peace and stability in the Asia-Pacific region should be resolutely upheld, and opposed the introduction of a Cold War "mentality".
On the corporate front, Bloomberg News reported that sovereign wealth fund Abu Dhabi Investment Authority is among the parties considering a bid for a 34% stake in Associated British Ports that could be valued at about 2 billion pounds or more.
And finally, consulting giant McKinsey & Co, which is known for advising businesses on a variety of projects including layoffs, plans to cut about 2,000 jobs, in one of its biggest round of layoffs, Bloomberg News reported.
Key developments that could influence markets on Wednesday:
European economic data: German and Italian Jan inflation, Germany Feb Ifo survey
European results: Iberdrola (OTC:IBDRY), Lloyds (LON:LLOY), Telefonica (NYSE:TEF)
U.S. results: eBay (NASDAQ:EBAY), Nvidia (NASDAQ:NVDA)
U.S. Fed releases minutes from Jan meeting