European markets head for slightly higher open as investors take stock of economic challenges

Holly Ellyatt

European markets are heading for a slightly higher open on Tuesday as investors remain on high alert for recession risks in the region.

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 Monday.

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.

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.

Source : CNBC