Stock indices resumed their monthly decline on concerns that monetary policy tightening intended to combat price pressures will hurt the global economy.
European stocks absorbed earlier gains and are trading at their lowest level in more than six weeks. Euro zone inflation accelerated to another record high of 9.1%, confirming the fact that the European Central Bank will consider a significant interest rate hike at next week's meeting.
US stock futures little changed near a one-month low. Sustained labor demand and consumer confidence data strengthened the argument for a sharp interest rate hike to combat inflation, while Federal Reserve officials reiterated their determination to ease price pressures. The deepening inversion of the yield curve generates fears that the Fed will trigger a recession.
Fed officials reiterated their intention to fight inflation. However, they remain uncertain about the significance of their move next month.
New York Fed President John Williams said that interest rates should remain unchanged at least until 2023.
"We're still going to see some pretty volatile times and maybe some further downside for equities in the short term," Steve Brice, chief investment officer at Standard Chartered Wealth Management, said on Bloomberg Television.
European utility prices fell on Wednesday, extending the sell-off into the fourth session as investors worried about Russian gas supplies at the start of a three-day shutdown of the key Nord Stream pipeline.
The Moscow Exchange Index is gaining momentum and is poised to rewrite summer highs of 2,500:
Some key events to watch this week:
- ECB Governing Council members due to speak at event Tuesday through Sept. 2.
- Euro-area CPI, Wednesday
- Russia's Gazprom set to halt Nord Stream pipeline gas flows for three days of maintenance, Wednesday
- Cleveland Fed President Loretta Mester due to speak Wednesday
- China Caixin manufacturing PMI, Thursday
- US nonfarm payrolls, Friday
- UK leadership ballot closes Friday. Winner announced Sept. 5
