European markets close lower as rally fades; PMI data points to recession

This is CNBC's live blog covering European markets.

European stocks closed lower on Wednesday as the positive trend seen in global stocks in recent days faded.

European markets

The pan-European Stoxx 600 provisionally ended the day 1% lower. Retail stocks dropped 3.2% to lead losses as the majority of sectors and all major bourses closed in negative territory.

Oil and gas stocks bucked the trend, closing up 0.8%.

After a mildly negative start to trading, markets sold off further on Wednesday following September's euro zone PMI reading, which cemented fears of a recession across the 19-member currency bloc.

The declines on Wednesday came after European markets rallied during the previous session, with the European blue chip index closing 3% higher. Travel and leisure stocks jumped 6.1% to lead gains as all sectors and major bourses closed in positive territory.

Overnight in Asia-Pacific markets, shares traded higher after U.S. stocks rallied for a second day Tuesday. U.S. stock futures were lower on Wednesday morning.

The two straight days of gains came on the back of a pullback in bond yields, with the 10-year Treasury yield falling below 3.6% at one point after topping 4% briefly last week.

weakening in the most recent job openings data prompted some investors to consider whether the Federal Reserve would slow the pace of interest rate hikes, reducing the likelihood of a deeper recession.

British pound dips to $1.12 following PM Truss's speech

The British pound dipped to $1.1291 in Wednesday afternoon trade following a speech by British Prime Minister Liz Truss, who doubled down on her market-roiling tax-cutting agenda.

"She may have hoped that her triple promise of growth would have calmed markets further but with nothing new to offer the table, her words have not had the desired effect so far," Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said.

"The pound dipped below $1.14, hovering around $1.135 and 10 year gilt yields lifted a little to whisker under 4%," she added in a note at 12.45pm local time.

— Karen Gilchrist

U.S. stocks open lower

U.S. stocks fell on Wednesday as Wall Street gave up some gains following a sharp two-day rally.

The Dow Jones Industrial Average opened 0.65% lower while the S&P 500 was down 0.7%. The Nasdaq Composite traded down 1% in early deals.

— Karen Gilchrist

Stocks on the move: GN Store Nord, Nordnet down 7%

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

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

- Elliot Smith

Individuals must select best positioned businesses in weakening demand conditions: EM strategist

Individuals must select best positioned businesses in weakening demand conditions: EM strategist
Individuals must select best positioned businesses in weakening demand conditions: EM strategist

Edmund Harriss, head of Asian & emerging market investments at Guinness Global Investors, discusses market action and consumer demand in the face of a challenging business environment.

Euro zone PMI falls to 20-month low as recession prospect rises

Euro zone business activity fell further than expected last month, increasing the likelihood of a recession in the 19-member common currency bloc.

S&P Global's final euro zone composite PMI (purchasing managers' index), seen as a reliable gauge of economic health, dropped to a 20-month low of 48.1 in September from 48.9 in August, short of a preliminary estimate of 48.2. Any reading below 50 indicates contraction.

- Elliot Smith

Stocks on the move: Nordnet down 6%, Avanza down 5% after September figures

Swedish financial services companies 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 chipmaker Infineon gained 4%.

- Elliot Smith

More German companies planning price increases, Ifo Institute says

More German companies are planning to hike prices in the coming month, according to a new Ifo Institute survey published Wednesday.

Price expectations across the whole economy for the coming month hit 53.5 points in September, up from a seasonally-adjusted 48.1 in August. The food price indicator stood at a full 100 points, up from 96.9 in August.

"Unfortunately, this probably means the wave of inflation isn't about to subside," says Timo Wollmershäuser, head of forecasts at Ifo.

"Especially when it comes to gas and electricity, the price pipeline is not yet exhausted."

- Elliot Smith

CNBC Pro: Bank of America reveals its global picks for this quarter, giving one stock over 100% upside

Interest rate rises, soaring energy prices and political turmoil in some parts of the world have battered stocks going into the final quarter of this year.

To help investors navigate the volatility, Bank of America has revealed its top "short-term stock recommendations" for the next quarter, which they expect to "significantly outperform" their peers.

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

— Ganesh Rao

Dollar index falls back to 110

One factor helping equity markets on Tuesday could be a slightly weaker dollar, which is falling for the fifth-straight day.

The DXY US Dollar Currency Index was down 1.5% in afternoon trading at 110.06. The index was trading as high as 114.78 last week, when there was concern about a failure of the UK government bond market.

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The British pound and the euro were each more than 1% against the dollar on Tuesday. The greenback was also down against the Japanese yen.

—Jesse Pound, Gina Francolla

CNBC Pro: Market is heading toward the ‘best week of the year,’ pro says — and names 2 stocks to play it

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

Investors should take the chance to "jump into the market," he said, as he named two stocks to take advantage of the rally ahead.

Pro subscribers can read more here.

— Zavier Ong

Stifel's Barry Bannister says there is "room for a rally" after two straight days of gains

Stifel chief equity strategist Barry Bannister said stocks can advance further after this week's sharp two-day rally.

"I don't think you have to worry about a recession until the second half of '23," Stifel chief equity strategist Barry Bannister said Tuesday on CNBC's "Closing Bell: Overtime." "So there is room for a rally as you go into the early 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 its interest rate hiking plan on inflation.

"Inflation leading indicators are all falling, global liquidity has tightened quite a bit. They don't want to kill the patient to cure the disease," Bannister said. "And if the data kept going their way, then the pause would last, and if the data don't go their way, they would hike again and we would go right back down."

— Sarah Min

CNBC Pro: This isn't the market bottom, Morgan Stanley says, naming 3 things that have to happen first

There's unlikely to be a sustainable market bottom unless three conditions are met, according to Morgan Stanley.

"We … remind readers that the last few innings of every bear market are very challenging to trade as volatility becomes extreme," they wrote. "None of the conditions we have been looking for to call an end to this bear market are in place."

Pro subscribers can read more here.

— Weizhen Tan

European markets: Here are the opening calls

European markets are heading for a higher open Tuesday as investors in the region appear to shrug off concerns among their U.S. and Asia-Pacific counterparts over China's tightening of Covid restrictions, which are continuing to pressure output.

The U.K.'s FTSE index is expected to open 27 points higher at 7,407, Germany's DAX up 33 points at 14,419, France's CAC up 20 points at 6,653 and Italy's FTSE MIB up 70 points at 24,433, according to data from IG.

Data releases include preliminary consumer confidence data for the euro zone in November.

— Holly Ellyatt