Title: European Stock Futures Lower; Recession Fears Mount

Aug 22, 2022 01:57AM ET

By: AnalysisWatch

European stock markets are expected to open lower on Monday and start the new week on a negative note as investors worry about a possible global recession and tighter monetary policy.

At 02:00 GMT, the DAX futures contract in Germany was trading 0.5% lower, the CAC 40 futures contract in France was down 0.4%, and the FTSE 100 futures contract in the UK was down 0.4%.

Fears of a recession are growing in Europe, exacerbated by the news that Russian state-owned energy giant Gazprom announced it would halt gas supplies to the continent for three days at the end of the month.

Gas prices in Europe are already approaching five-month highs, adding to the inflationary pressures weighing heavily on European businesses and consumers.

Given this, this week's flash Eurozone PMIs will be closely watched for recession risk. August's figures, to be released on Tuesday, are likely to show another month of falling business activity after the final aggregate PMI fell to a 17-month low in July.

The People's Bank of China cut key interest rates for a second consecutive week on Monday as the country's government tries to revive an economy hit by a property crisis and a resurgence of cases of COVID-19.

However, interest rates in Europe and the U.S. are moving in the opposite direction, with the ECB expected to raise rates by another 50 basis points in September, but uncertainty remains over the path of Federal Reserve rate hikes this year.

Investors will be anxiously awaiting Fed Chairman Jay Powell's speech on Friday in Jackson Hole, Wyoming, for possible answers on how high U.S. interest rates can go and how long they will need to stay elevated to bring inflation back under control.