Will the bad news stop?
A look at the day ahead in European and global markets from Anshuman Daga
Soaring gas prices, a recession looming over Europe, red-hot inflation and the euro back to near two-decade lows.
It seems like there’s no dearth of bad news in the region, just ahead of key flash purchasing managers index survey data that may show another month of business contraction.
The latest market concerns over runaway gas prices are not entirely new but with Europe facing more cuts in Russian oil and gas exports, the pain can only get worse.
Societe Generale’s strategist notes that spot prices are up 70% in a month and six times as high as they were a year ago.
Though this doesn’t translate directly into a big rise in the cost of imported natural gas, the strategist says the impact on Europe’s terms of trade will be devastating if prices stay at current levels for long enough.
The cocktail of negative news has already pulled down the euro to its lowest in two decades, while the pound was hobbled near 2-1/2 year lows.
Meanwhile, just as Sweden readies for elections next month, data showed home prices declined for a fourth straight month in July – more pressure for the minority Social Democrat government, which faces a tight general election in September.
Asian stocks fell to a one-month low after Wall Street stumbled as consensus grew that the Federal Reserve’s gathering later this week in Jackson Hole might reiterate the need for sharp rate hikes to stamp out inflation.
Economic data: August flash PMIs in euro zone, UK, U.S,; Euro zone flash August consumer confidence and Denmark consumer confidence.
ECB board member Panetta speaks at Bocconi University
Minneapolis Fed President Kashkari appears at a Q&A session