European markets close lower as recession fears grow; pound sinks to lowest level against dollar since 1985

The British pound fell on Wednesday and hit its lowest level against the dollar since 1985.

The fall came as British investors reacted to the weakening economy and new Prime Minister. The pound fell to $1.14 against the dollar.

- Carmen Reinicke

U.S. stocks moved slightly higher Wednesday morning despite growing concern over the prospects of another major rate hike from the Federal Reserve.

The Dow Jones Industrial Average was up 0.4% while the S&P 500 moved 0.5% higher. The Nasdaq was also up 0.8% in early trade.

— Karen Gilchrist

Austrian electricity company Verbund jumped 12% by late morning, leading a broad rally for European utilities stocks as the market anticipated potential shifts in regulation to weather the continent's deepening energy crisis.

At the bottom of the Stoxx 600, French video game manufacturer Ubisoft Entertainment plunged more than 16% after announcing that Chinese conglomerate Tencent had increased its stake in the company, a move seen as reducing the likelihood of a full buyout.

- Elliot Smith

The euro rose against the dollar and the British pound Wednesday morning, as the European Central Bank prepared for a crucial policy meeting Thursday.

The ECB is expected to frontload a series of rate hikes and sacrifice growth in the region in a bid to tame inflation of 9.7%, which is forecast to rise further.

A "jumbo" rate hike of 75 basis points is a possibility and has been largely priced in by markets, Berenberg analysts said.

The British pound was down against the U.S. dollar and the euro Wednesday morning, as new prime minister Liz Truss began her first full day in office.

Sterling was trading at $1.1495 at 8:30 a.m. London time, down 0.17% on the previous day, keeping it around the lowest level it has traded at since the 1980s.

Analysts at ING said traders would be processing reports published Tuesday that Truss is planning to freeze energy bills at a cost of £130 billion and provide billions more in business support, which would likely impact the U.K.'s growth outlook and debt position.

The euro was up 0.17% on the pound at 0.8611, ahead of the European Central Bank's Thursday policy meeting, when it is expected to announce a 50 or 75 basis points rate hike.

The EU's central currency was up 0.02% against the greenback at $0.9902 after dropping below the 99 cent level Monday.

— Jenni Reid

German energy giant Uniper, the country's biggest gas importer, was the worst-performing company, with its shares down around 10% in early trade.

Uniper has been hit by Russia halting gas flows to Europe and soaring prices, with its CEO Klaus-Dieter Maubach telling CNBC on Tuesday the "worst is still to come" in gas market volatility.

Siemens Energy, which Russia's Gazprom accuses of failing to fix faulty equipment, a claim it denies, was down 6%.

— Jenni Reid

Nomura has cut its forecast for China's full-year GDP to 2.7%, another downgrade from its previous 2.8% estimate set in August.

The new outlook is based on Nomura's analysis that found 12% of China's GDP is affected by Covid controls on a weighted basis, up from 5.3% last week.

Several cities including the tech hub of Shenzhen have tightened Covid controls in the last few weeks after reporting new local infections. Chengdu has also ordered people to stay home while authorities conduct mass virus testing.

Read the full story here.

–Evelyn Cheng

Oil and gas stocks are set to get a boost from heightened tensions surrounding Russian gas supplies to Europe, according to one analyst.

Kenny Polcari, chief market strategist at SlateStone Wealth, told CNBC's "Street Signs Asia" that investors should zoom in on big U.S. energy names which are also good dividend payers.

One stock he named is up 125% this year, and he says there's more "room to run."

Pro subscribers can read more here.

— Weizhen Tan

Oil prices fell on Wednesday following more Covid curbs in China and expectations of more interest rate hikes globally.

The U.S. West Texas Intermediate futures fell 1.45% to stand at $85.62 per barrel, while Brent crude futures slid 1.14% to $91.77 per barrel, erasing earlier gains following the latest OPEC+ meeting and its decision to pare output.

A Reuters forecast expects WTI to extend its downtrend to reach $83.17 per barrel.

—Lee Ying Shan

After years of market beating returns, semiconductor stocks have sold off heavily this year. But one stock has emerged relatively unscathed from the market carnage. Not only has it outperformed its peers, it has beaten the S&P 500 by a country mile.

And analysts think the stock can still go higher.

Pro subscribers can read more here.

— Zavier Ong

A bond selloff has boosted U.S. Treasury yields to their highest levels since mid-June as investors weigh what strong economic data means for the Federal Reserve's future rate hikes.

The U.S. 10-year Treasury yield rose as much as 3.353%, the highest level since June 16, when the yield hit 3.495%. Yields are inverse to prices.

The yield on the U.S. 30-year Treasury hit a high of 3.484% and the U.S. 5-year Treasury yield hit 3.334%, also both the top levels seen since mid-June.

The 2-year yield also rose to a daily high of 3.535%, but it is only the highest yield for the note since Friday.

- Carmen Reinicke

European markets are expected to open in negative territory Tuesday.

The U.K.'s FTSE 100 index is expected to open 17 points lower at 8,393, Germany's DAX down 18 points at 18,718, France's CAC 5 points lower at 8,199 and Italy's FTSE MIB down 31 points at 34,451, according to data from IG.

Earnings are due from Euronext, Eutelsat, Hannover Re, Bayer, Porsche and Vodafone.

— Holly Ellyatt