European markets close lower as investors grapple with Fed tightening fears

European markets closed lower on Wednesday as traders grappled with fears of higher interest rates and a looming economic downturn.

European markets

The pan-European Stoxx 600 provisionally closed down by 1%. Oil and gas stocks fell 2.7% to lead losses as most sectors and major bourses dipped into negative territory.

Travel and leisure stocks bucked the downward trend, closing up 0.6%.

Market jitters have been prevalent since Friday after hawkish remarks from Federal Reserve Chair Jerome Powell. On Tuesday, New York Fed President John Williams called for a "somewhat restrictive policy to slow demand."

Shares in Asia-Pacific closed mostly lower overnight following a negative lead from Wall Street, and as investors digested China's factory activity data. Meanwhile, U.S. stocks traded mixed at the start of Wednesday's session.

U.S. stocks mixed as investors weigh further interest rate hikes

U.S. stocks traded mixed at the start of Wednesday's session as investors weighed the prospect of further interest rate increases from central banks along with a possible recession.

The Dow Jones Industrial Average dipped about 60 points, or 0.2%, while the Nasdaq Composite was slightly higher. The S&P 500 was virtually unmoved, struggling to regain the 4,000 level after falling below it on Tuesday for the first time since July.

All of the major averages are on track to end the month about 3% lower.

— Ryan Browne

Stocks on the move: Lundbergs up 5%, Oxford Nano down 5%

By late morning in Europe, Swedish investment firm Lundbergs saw its shares rise 5.5% to the top of the Stoxx 600, while at the bottom of the index, Britain's Oxford Nanopore Technologies fell 5.5%.

Russia's Gazprom rallies by over 20% after bumper profit and dividend announcement

Russia's Gazprom saw its shares surge on Wednesday after reporting bumper first-half profits and announcing a new dividend to shareholders.
Stoyan Vassev | Press service of Gazprom Neft | via Reuters

Russian gas giant Gazprom posted a record first-half profit and promised new dividends to shareholders, sending its shares soaring more than 27% in early trade in Moscow on Wednesday.

The majority state-owned energy company said its board had proposed a dividend of 51.03 Russian rubles ($0.85) per ordinary share for the first half of 2022. In its first-half earnings report on Tuesday, Gazprom announced a record 2.5 trillion ruble ($41.75 billion) net profit.

The leap in the group's share price took Russia's dollar-denominated RTS index 3.6% higher and the ruble-denominated MOEX Russia Index 4.7% higher by late morning in Moscow.

Gazprom's earnings boost comes amid volatile relations with its customers in Europe. The EU is frantically trying to reduce its reliance on Russian gas following Russia's invasion of Ukraine, while still being largely dependent on such supplies to the bloc.

Gazprom, meanwhile, has greatly reduced gas flows to Europe via the Nord Stream 1 pipeline citing maintenance issues and international sanctions, leading European officials to accuse Russia of using gas supplies as a way to "blackmail" it.

The Nord Stream 1 pipeline has been shut down Wednesday with the outage due to last several days; Gazprom again said this was due to a compressor unit requiring maintenance.

— Elliot Smith

France's Le Maire: EU must decouple price of gas and decarbonized energy 'as soon as possible'

France's Le Maire: EU must decouple price of gas and decarbonized energy 'as soon as possible'
France's Le Maire: EU must decouple price of gas and decarbonized energy 'as soon as possible'

French Finance Minister Bruno Le Maire said on Wednesday that the European Union must decouple the price of gas and decarbonized energy "as soon as possible," and that France had been working with the EU Commission on the issue.

"I am deeply convinced that this is of the utmost importance to change the rules for the European energy markets. We cannot have this connection between the price of gas and the price of decarbonated energy," Le Maire told CNBC's Charlotte Reed.

- Elliot Smith

Stocks on the move: Ackermans & van Haaren up 6%, Drax down 2%

There was little by way of substantial individual share price movement on the Stoxx 600 in early trade.

Belgian diversified group Ackermans & van Haaren climbed 6.6% to lead the index after its first-half results, while British power group Drax slipped 2.5%.

- Elliot Smith

CNBC Pro: What poses the biggest risk to stocks? Wall Street is watching these indicators closely

Stocks have taken yet another turn lower after U.S. Federal Reserve Chairman Jerome Powell made clear last week that rate hikes are set to continue even if they cause more pain ahead.

What could drive the next leg down for stocks? Morgan Stanley and Wolfe Research have identified a number of indicators they expect to determine market moves looking ahead.

CNBC Pro subscribers can read more here.

— Weizhen Tan

China’s factory activity contracted in August, official data shows

China's official manufacturing Purchasing Managers' Index for August stood at 49.4, official data showed.

That's the second monthly contraction, but is better than the 49.2 that analysts expected, according to a Reuters poll. The PMI in July was at 49.

PMI readings are sequential and represent month-on-month expansion or contraction. The 50-point mark that separates growth from contraction.

The non-manufacturing PMI came in at 52.6 for August, compared with a reading of 53.8 in July.

— Abigail Ng

CNBC Pro: Morgan Stanley names 3 EV stocks to cash in on Beijing's auto sector boost

China's government is striving to boost auto sales, and this is likely to benefit electric vehicles more than their petrol-based counterparts, according to Morgan Stanley.

"While China braces for its slowest quarterly economic growth in two years, the car industry is benefiting from multifaceted stimulus offered by central and local governments," the bank's analysts said in a note this month.

They named three buy-rated stocks they expect to get a boost from the measures.

Pro subscribers can read more here.

— Zavier Ong

European markets: Here are the opening calls

European markets are heading for a mixed on Tuesday as investors keep a close eye on China amid speculation that the government could make changes to its strict zero-Covid policy.

The U.K.'s FTSE index is expected to open 46 points higher at 7,494, Germany's DAX down 3 points at 14,401, France's CAC up 2 points at 6,675 and Italy's FTSE MIB up 27 points at 24,523, according to data from IG.

Earnings come from Easyjet and data releases include euro zone consumer confidence and business climate data for November.

— Holly Ellyatt

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