European markets rose cautiously on Tuesday as investors continued to assess recession risks in the region.
The pan-European Stoxx 600 ended the day up 0.2%, with the majority of sectors and all major bourses in the black. Retail stocks were the best performing of the day, closing up 1.7%.
Oil and gas stocks were the outliers, ending the day down 2.5% as Brent crude prices retreated following a modest supply cut from OPEC+ and previously surging gas prices pulled back.
European markets closed lower on Monday as investors pondered a raft of economic challenges the region faces, with the halted gas supply from Russia dominating market sentiment.
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The sharp downward moves for risk assets came after Russia's state-owned energy giant Gazprom announced that gas flows to Europe via the Nord Stream 1 pipeline would be halted indefinitely, citing additional repair requirements. The euro fell sharply while European gas prices soared.
Gas flows via Nord Stream 1 will not resume until Siemens Energy repairs faulty equipment, Gazprom's deputy CEO Vitaly Markelov told Reuters on Tuesday.
Stateside, U.S. stocks moved lower following the Labor Day holiday. Asian stocks also closed just below the flatline.
U.S. markets open higher
U.S. markets opened higher Tuesday as investors returned from the Labor Day holiday.
The Dow Jones Industrial Average was 0.4% higher, while the S&P 500 was up 0.2% and the Nasdaq was flat.
— Karen Gilchrist
Stocks on the move: Greggs, Delivery Hero up 7%, Uniper down 4%
British bakery chain Greggs added 7.8% to lead the Stoxx 600 by mid-afternoon trade in Europe
Delivery Hero gained 7.5% after Morgan Stanley upgraded the stock to "overweight" from "equal-weight," citing fast growth and increasing profitability.
At the bottom of the European blue chip index, Uniper fell 4.7% as uncertainty continues for the German utility, a major gas importer, after Russia shut off gas flows to Europe.
- Elliot Smith
British Chamber of Commerce calls for 'support on the scale of Covid'
Ruby McGregor-Smith, president of the British Chamber of Commerce, has said it is essential that the government publish a plan to help medium and small businesses cope with rising costs this winter.
"What we absolutely need right now is a scale of support on the scale of Covid," she said.
It comes after Liz Truss won the Conservative leadership election, becoming Britain's prime minister today, amid a number of tough economic challenges — not least the country's cost-of-living crisis.
— Katrina Bishop
Consumer stocks will suffer further as margins get more squeezed, says Saxo Bank analyst
Consumer discretionary stocks will weaken further as tightening financial conditions meet a global energy crisis, according to Peter Garnry, head of equity strategy at Saxo Bank.
Consumer-facing companies are at the limit of the input costs they can pass on, as if they raise prices by 6%, volumes will fall by more than 6%, he told "Squawk Box Europe".
"You are increasingly hearing from consumer companies that they are going to eat into margins over the next year," Garnry said.
— Jenni Reid
Uniper CEO says the worst is still to come after Russia halts gas flows to Europe
The chief executive of German gas giant Uniper has delivered a bleak assessment of Europe's deepening energy crisis, warning that the worst is still to come.
"I have said this a number of times now over this year and I'm educating also policymakers. Look, the worst is still to come," Uniper CEO Klaus-Dieter Maubach told CNBC's Hadley Gamble at Gastech 2022 in Milan, Italy.
"What we see on the wholesale market is 20 times the price that we have seen two years ago — 20 times. That is why I think we need to have really an open discussion with everyone taking responsibility on how to fix that," he added.
— Sam Meredith
Brent, European gas prices retreat
International benchmark Brent crude prices fell 2.7% by late morning in Europe after OPEC+ agreed a modest supply cut.
European gas prices also fell by around 10%, according to the latest Dutch TTF Gas Futures readings, pulling back from Monday's 30% surge on the back of Russia's halting of gas flows to Europe via the Nord Stream 1 pipeline.
- Elliot Smith
The UK’s prime minister could be about to shake up the City of London
As Liz Truss officially becomes prime minister, questions are being asked about her plans to change how the U.K.'s main finance district – the City of London – is regulated.
Truss' campaign team originally suggested a merger between the big three regulators – Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA) and the Payment Services Regulator (PSR) – in the Financial Times last month.
In an email to CNBC, former FCA insider Matthew Nunan asked what the move would achieve.
"If the answer is the reformation of the old Financial Services Authority, what was the question? Or is it simply change for change's sake?"
— Hannah Ward-Glenton
U.S. Treasury yields rise as investors monitor economic data
U.S. Treasury yields were higher as market participants awaited a fresh batch of economic data and Treasury auctions following Monday's Labor Day recess.
The yield on the 2-year Treasury note jumped nearly 7 basis points to trade at 3.466%.
— Sam Meredith
German industrial orders slide 1.1% on the month
German industrial orders declined by 1.1% in July, data from the federal statistics office showed on Tuesday, below expectations of a 0.5% contraction from a Reuters poll of analysts.
The fall marks a sixth consecutive month of shrinkage as the war in Ukraine continues to squeeze activity in Europe's largest economy, with rising costs and material shortages hampering industry.
- Elliot Smith
Stocks on the move: D'Ieteren up 9%, Marks & Spencer up 7%
Shares of Belgian automobile distribution company D'Ieteren Group climbed more than 9% in early trade to lead the Stoxx 600 after reporting strong first-half earnings, while British retailer Marks & Spencer added 7.5% to lead a broad advance for retail stocks.
- Elliot Smith
Sterling jumps on reports of new UK PM's energy bill plans
Sterling climbed 0.6% against the dollar in early trade on Tuesday after Bloomberg reported that incoming British Prime Minister Liz Truss has drafted plans to freeze energy bills for U.K. households, in a bid to mitigate the country's spiraling cost of living crisis.
The pound was changing hands for around $1.158 shortly after 8 a.m. in London, having slid below $1.15 on Monday.
The report overnight suggested that Truss plans to fix typical household gas and electricity prices at their current level £1,971 ($2,300) per year. British energy regulator Ofgem recently announced an 80% increase to the country's energy price cap from Oct. 1, which would take the cap to £3,548 per year.
— Elliot Smith
Reserve Bank of Australia expected to lift rates again for a fifth time in a row
The Reserve Bank of Australia is expected to raise interest rates Tuesday by another 0.5 percentage points on the back of a "fully employed labor market, a massive inflation overshoot and the fact that financial conditions are still highly accommodative," Goldman Sachs chief economist for Australia and New Zealand Andrew Boak said.
Boak told CNBC's "Squawk Box Asia" markets do not expect the central bank to soften its position on reining in inflation when it announces its rate decision at 2:30 p.m. Australian Eastern Standard Time.
"I think markets will be particularly sensitive to any sort of signal the RBA is thinking about stepping down the pace of tightening to say 25 basis point increments," Boak said.
"I think key language will be retained around expecting to tighten further over the coming months. But also the caveat that policy is not on a preset path."
There are risks with continued interest rate lifts such as the "disorderly unwind in the housing market" but Boak says "that is not our central scenario."
— Su-Lin Tan
CNBC Pro: Forget the volatility. Buy this ETF for a long term growth story, analyst says
Investors should navigate the ongoing market volatility by getting into ETFs with a long-term growth story, according to one portfolio manager.
"The idea of owning ETF instead of one specific player — you have the whole basket and ride the wave of more capital investment into the cyberspace," John Petrides, portfolio manager at Tocqueville Asset Management, told CNBC.
He names his favorite cyber security ETF, along with two others.
— Weizhen Tan
Russian energy minister says price cap will lead to shipping more Russian oil to Asia
Russian energy minister Nikolai Shulginov said the country will ship more oil to Asia in response to price caps on its oil exports, Reuters reported.
"Any actions to impose a price cap will lead to deficit on (initiating countries') own markets and will increase price volatility," he told reporters at the Eastern Economic Forum in Vladivostok, according to Reuters.
Last week, the G-7 economic powers agreed to cap the price of Russian crude to punish Moscow for its unprovoked invasion of Ukraine. Before the invasion, Russia exported approximately half of its crude and petroleum product exports to Europe, according to the International Energy Agency.
— Natalie Tham
CNBC Pro: Hold cash as it's beating the market, say the pros
Strategists are urging investors to allocate more of their portfolios to cash during these volatile times, as interest rate hikes mean it's now offering higher yields.
"Cash was king" last month, Bank of America said in a Sept. 1 note, as most asset classes — such as stocks, bonds and even commodities — posted losses.
Here's how to add it to your portfolios, according to the pros.
— Weizhen Tan
European markets: Here are the opening calls
European stocks are expected to open cautiously higher on Wednesday with the U.K.'s FTSE index seen 18 points higher at 7,560, Germany's DAX 33 points higher at 13,944, France's CAC 40 up 18 points at 6,616 and Italy's FTSE MIB up 42 points at 23,029, according to data from IG.
Data releases include preliminary euro zone unemployment data for the second quarter as well as second quarter gross domestic product. The latest U.K. inflation numbers for July will be released as well as preliminary second quarter Dutch GDP.
Earnings come from Uniper, Carlsberg, Persimmon, Balfour Beatty, BAT and National Grid.