Watch For:

EU business & consumer surveys; Italy PPI; Germany provisional CPI, CPI data for Bavaria, Hesse, Baden-Wuerttemberg, Brandenburg, North Rhine Westphalia and Saxony; trading updates from Next PLC and H&M

Opening Call:

European shares may open higher Thursday, tracking U.S. equities that rebounded on the Bank of England's bond-buying action. Asian stock benchmarks rose; Treasury yields rebounded; the dollar gained; oil and gold declined.


European stocks could open higher, extending overnight gains and tracking Wall Street's rally.

On Wednesday, U.S. equities recovered from a week's of losses after the Bank of England said it would begin buying U.K. government bonds in a bid to stabilize markets.

"For the last several trading days, the pressure on U.S. stocks has been a reflection of some of the turmoil in the fixed-income market," UBS said.

"As that turmoil settles down, we're seeing a better tone for equities," it said.

However, Oanda said Hurricane Ian was another inflationary risk. Markets were seeing a relief rally, but "the backdrop is still for inflation to remain ugly and vulnerable to further shocks," Oanda said.

"Everything about this hurricane is screaming that were going to have another inflation shock and that will keep inflationary pressures going, " Oanda said, adding that the economy was still vulnerable to shocks" including the hurricane, Covid-19 in China and others worldwide.

Rob Daly, director of fixed income at Glenmede Investment Management, was also cautious in his outlook. "We've had a rough road over the past couple of weeks and the market has been looking for a bit of hope, but I think that hope is a bit misplaced," he said.


The dollar was stronger in Asia following a rebound in Treasury yields.

With U.S. real rates remaining negative, it is hard for markets to turn against the dollar without a viable alternative currency, DBS Group Research said.


Treasury yields recovered in Asia after ending the New York session on Wednesday with their biggest one-day decline in years.

"The Treasury market sees the pivot in the U.K. and a possible pivot by the European Central Bank as starting to add up to a possible pivot in the U.S., where markets are getting a bit overdone," said Seaport Global Holdings.

The U.K.'s 30-year government bond yield plummeted to 4.09% on Wednesday from over 5% before the BOE announcement.

"It doesn't look like the volatility is going to abate any time soon," UBS said.

The move in gilts has been "unprecedented and smacks of the sharp jumps in the European debt crisis" a decade ago, said Rabobank.

"There's speculation that while the U.K. may be an extreme case, other jurisdictions might opt to operate with easier policy in response to their own cost-of-living crises." With the exception of the Bank of Japan, all central banks are "in the process of committing a policy error of some sort."

Read: Global Bonds Rally After 10-Year Treasury Yield Touches 4%


Oil futures declined in Asia, though prices could be supported in the near term, amid heightened worries that Russia's energy exports may no longer be reliable following the suspected sabotage of the Nord Stream pipelines, CBA said.

Focus is now on next week's meeting of OPEC and its allies.

Bullish analysts have argued that supplies remain tight and that prices could rebound on significant supply concerns.

However, analysts at Sevens Report Research said, "we have to acknowledge the dominant trend is still lower for the oil market right now but we do continue to look for the market to stabilize soon as we do not believe the combination of overcompliance by OPEC+, tight global physical markets, and the geopolitical uncertainty surrounding the war in Ukraine can be solely offset by concerns about the global economy."


Natural-gas futures in the U.S. finished higher, giving up early losses, as traders kept an eye on Hurricane Ian's impact in Florida.

"Ian is not likely to have a major effect on key gas infrastructure or market fundamentals," said Emily McClain, vice president at Rystad Energy.

The "primary, longer-term influence" on natural gas remains the expected gas shortages and price spikes this winter in Europe, as it navigates the season without the flow of gas from Russia, said Tyler Richey, co-editor at Sevens Report Research.

"That leaves the fundamental backdrop still in favor of the bulls on a longer timeframe," Richey said.


Gold prices fell in Asia after its highest finish overnight in nearly a week.

Gold may maintain a negative outlook for now, as the Fed's recent guidance has signaled that borrowing costs will rise and remain high for some time to bring inflation down, DailyFX strategist Diego Colman said.

"This means that nominal U.S. bond rates will soon resume their ascent, paving the way for real yields to remain elevated and continue to weigh on precious metals, as has been the case over the past few months," he adds.

Gold prices welcomed the BOE's "dramatic intervention that avoided an imminent gilts crash and sent global bond yields sharply lower," Oanda said.

"This was somewhat expected and serves as a reminder that gold will do just fine once the global bond market selloff is truly over," Oanda said.

"The fact that major-economy policymakers are trying to stem and reverse market action shows how worried they are about an uncontrolled crash," Adrian Ash, director of research at BullionVault, said. "Gold is finding a decent bid amid all this uncertainty."


Copper edged lower amid USD strength and higher Treasury yields.

A strong USD and rising global yields were weighing on the demand side of the market, which was already beginning to deteriorate because of mounting global growth and Chinese property-market concerns, TD Securities said.



Developing Countries Face Stiff Economic Headwinds, World Bank Chief Says

WASHINGTON-The head of the World Bank warned that developing nations face an extremely challenging near-term outlook, as the sharp slowdown in global growth raises the risks of a prolonged recession.

Speaking Wednesday at Stanford University, David Malpass said the challenges for the developing world are shaped by higher food, fertilizer and energy prices caused by the war in Ukraine, as well as rising interest rates, currency depreciation and capital outflows, which could result in a shortage of funds needed to support people's lives and economic activities.


U.K. Market Woes Threaten Economic and Political Crisis

The U.K. continued to try to stave off a financial and economic crisis on Wednesday as the country's central bank carried out emergency buying of government bonds to stabilize a spiraling debt market, adding pressure on the government of new Prime Minister Liz Truss.

The central bank's surprise move to spend 1 billion pounds buying U.K. government debt spurred a rally in the bond market, and helped the embattled pound gain slightly against the U.S. dollar, though it was still down against the euro. But the intervention-to stave off an imminent pension crisis-underscored the risks that continuing market turbulence poses to the U.K. financial system and economy.


U.K. Markets Turmoil Puts Spotlight on New Chancellor Kwasi Kwarteng

LONDON-Kwasi Kwarteng was just two weeks into his job as U.K. chancellor of the exchequer when he unveiled a bold plan to reshape the British economy by slashing taxes in what he called "a new approach to a new era."

Skeptical lawmakers in Britain's Parliament now have a different moniker for the package: the "Kami-kwasi budget."


Amazon Raises Pay for Hourly Employees as It Prepares for Holidays Inc. is raising pay for its hourly employees as the company prepares for the crucial holiday shopping season.

The company on Wednesday said it was increasing average starting pay for its front-line warehouse employees from $18 to more than $19 an hour, with many employees earning between $16 and $26 an hour depending on their location in the U.S. Amazon said the raises represent a nearly $1 billion investment over the next year.


VW Prices Porsche IPO at Top of Range

Germany's Volkswagen AG said Wednesday it had priced the initial public offering of Porsche AG at the top end of the targeted range, putting the IPO on track to become one of Europe's largest in more than a decade.

The pricing signaled investors' confidence that the iconic sports-car maker can thrive even as rising interest rates and rampant inflation rile equity markets.


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Expected Major Events for Thursday

04:30/NED: Sep Producer confidence survey

06:00/DEN: Sep Business tendency survey

07:00/SVK: Sep Business tendency survey

07:00/SVK: Sep Economic sentiment indicator

07:00/SPN: Sep Flash Estimate CPI

08:00/ITA: Aug PPI

08:00/GER: Sep Brandenburg CPI

08:00/GER: Sep Bavaria CPI

08:00/GER: Sep Hesse CPI

08:00/GER: Sep Baden-Wuerttemberg CPI

08:00/GER: Ifo Joint Economic Forecast of German economic research institutes

08:30/GER: Sep North Rhine Westphalia CPI

09:00/MLT: Aug PPI

09:00/CYP: Jul Industrial Production Index

09:00/EU: Sep Business & Consumer Surveys - Business Climate Indicator & Economic Sentiment Indicator

09:00/GER: Sep Saxony CPI

09:30/BEL: Sep CPI

12:00/GER: Sep Provisional CPI

12:30/CZE: Czech interest rate decision

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(END) Dow Jones Newswires

September 29, 2022 00:16 ET (04:16 GMT)

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