European markets closed lower as rally faded; PMI data point to recession

Sterling fell to $1.1291 in Wednesday afternoon trading after a speech by British Prime Minister Liz Truss, who doubled down on the market’s faltering tax cut agenda.

“She may have hoped her triple promise of growth would bring more calm to the markets, but with nothing new to offer, her words have not had the desired effect so far,” said Susanna Streeter, chief investment and markets analyst, Hargreaves Lansdowne.

“The pound fell below $1.14, hovering around $1.135, and 10-year gold yields rose slightly to less than 4%,” she added in a note at 12.45pm local time.

Karen Gilchrist

US stocks fell on Wednesday as Wall Street gave up some gains after a sharp two-day rally.

The Dow Jones Industrial Average opened 0.65% lower while the S&P 500 fell 0.7%. The Nasdaq Composite is down 1% in early trades.

Karen Gilchrist

Danish hearing aid maker GN Store Nord slid more than 7.5% by mid-afternoon to the bottom of the Stoxx 600.

Swedish financial services company Nordnet also fell 7% after publishing its monthly figures for September.

– Elliot Smith

Edmund Harris, Head of Asian and Emerging Markets Investments at Guinness Global Investors, discusses market action and consumer demand in the face of a challenging business environment.

Trade activity in the eurozone fell last month more than expected, raising the possibility of a recession in the 19-nation common currency bloc.

The latest composite Eurozone S&P Global Purchasing Managers’ Index (PMI), seen as a reliable measure of economic health, fell to a 20-month low of 48.1 in September from 48.9 in August, which is down from an initial estimate of 48.2. Any reading below 50 indicates a contraction.

– Elliot Smith

Swedish financial services firms Avanza and Nordnet fell 5% and 6% respectively in early trade after publishing their monthly figures for September.

At the top of the Stoxx 600, German chip maker Infineon gained 4%.

More German companies are planning to raise prices next month, according to a new Ifo survey published on Wednesday.

Price expectations across the entire economy for the next month came in at 53.5 points in September, up from a seasonally adjusted 48.1 in August. The food price index stood at a full 100 points, up from 96.9 in August.

“Unfortunately, this probably means that the inflation tide is not about to abate,” says Timo Wollmershäuser, head of forecasting at Ifo.

“Especially when it comes to gas and electricity, the price pipeline is not out yet.”

– Elliot Smith

Rising interest rates, rising energy prices and political turmoil in some parts of the world hurt stocks in the last quarter of this year.

To help investors weather volatility, Bank of America revealed its top “short-term stock recommendations” for the upcoming quarter, which they expect will be “significantly outperformed” by their peers.

CNBC Pro subscribers can read about five of their stock picks here.

– Ganesh Rao

One factor that helped stock markets on Tuesday may be a slightly weaker dollar, which is falling for the fifth consecutive day.

DXY is down 1.5% in the afternoon at 110.06. The index traded as high as 114.78 last week, when there was concern about the failure of the UK government bond market.

The British pound and the euro rose more than 1% against the dollar on Tuesday. The dollar also fell against the Japanese yen.

— Jesse Pound and Gina Francola

Market veteran Phil Blancato, whose company has more than $4 billion in assets under management, said he expects next week to be a “turnaround week” for markets.

He said investors should seize the opportunity to “enter the market,” as he identified two stocks to take advantage of the rally in the future.

Professional subscribers can read more here.

– Xavier Ong

Barry Bannister, chief equity strategist at Stifel, said stocks could advance further after a sharp two-day rally this week.

“I don’t think you should worry about a recession until the second half of ’23,” Barry Bannister, chief equity strategist at Stifel, said Tuesday on CNBC’s “Closing Bell: Overtime.” “So there is room for a gathering as we enter the first part of next year.”

The strategist said there could be a “conditional pause” at the December meeting as the Federal Reserve reviews the impact of a rate hike plan on inflation.

“The main indicators of inflation are all declining and global liquidity is a bit tight. They don’t want to kill the patient to cure the disease,” Bannister said. “And if the data keeps going its way, the pauses will continue, and if the data doesn’t go its way, they will go up again and we will go back down.”

– Sarah Min

A sustainable market bottom is unlikely unless three conditions are met, according to Morgan Stanley.

“We remind readers that the last few rounds of every bear market present a major challenge to trading as volatility becomes intense,” they wrote. “None of the conditions we were looking for to put an end to this bear market have been put in place.”

Professional subscribers can read more here.

– Weezin Tan

European stocks are heading to a lower open on Wednesday, breaking the positive trend seen in the previous session.

The UK FTSE is expected to drop 27 points at 7059, the German DAX is expected to fall 59 points at 12606, the French CAC 40 is expected to fall 25 points at 6.005, and the Italian FTSE MIB is down 112 points at 21426, according to data from IG. .

The expected declines on Wednesday come after European markets rebounded yesterday, with the pan-European Stoxx 600 closing 3% higher. Travel and leisure stocks jumped 6.1%, topping the gains, with all major sectors and stock exchanges entering positive territory.

The British pound rose on Tuesday after a dramatic shift in UK government policy and British sovereign bond yields also fell after a massive sell-off last week.

The data released on Wednesday includes the final Eurozone PMI data for September and German import and export data for August. The profits come from Tesco and Bang & Olufsen.

– Holly Eliat