WIKIFX REPORT: European markets open much lower

EUROPEAN SHARES

As Europe continues to curtail Russian gas imports, equity markets are preparing for further downturn in European economic growth, but there may be more risks yet to be priced in. European markets opened significantly lower on Thursday, alongside Asian shares and US futures, as fear continues to dominate.

European stocks (.STOXX) fell 0.8% to their lowest in over five weeks, and Japan's blue-chip Nikkei slid 2.7% (.N225) and also The “risk-off” sentiment keeps strengthening this week after the summer optimism faded following the latest hawkish speeches at the Jackson Hole symposium last week.

Jerome Powell‘s determination to tackle inflation at all costs while more and more macro data point towards an economic downturn is a massive bearish market driver to investors. Furthermore, the recent lockdown pronounced by Beijing in Chengdu – a city of 21 million people – is also adding pressure to riskier assets as it sparks expectation of slower demand for several assets in the world’s second-largest economy.

Reasons to get long on stocks are fading while bearish leverages continue to pile up, and an increasing number of investors are now starting to consider the possibility of new lows before the year-end.

More clues may be provided today with a batch of PMI releases from Germany, the UK and the US, while tomorrows US NFP data are expected to display a slight increase compared to last month.

The STOXX-50 index is now trading close to its immediate support around the 3,470 pts support level. A break-out of this zone could quickly drive prices another 100-points down, towards 3,370 pts.