Towards recession

Will business double down after recent data confirms fears of a runaway rise in euro-zone consumer prices?

While European Central Bank board member Isabel Schnabel did not rule out a technical slowdown in the group of 19 countries in an interview with Reuters last week, the eurozone’s flash PMIs this week will keep recession risks under close watch.

August data expected on Tuesday could show another month of contraction in business activity after S&P Global’s final composite PMI index fell to a 17-month low in July.

Further weakness could spell more bad news for the euro, which fell to a new five-week low on Monday.

High energy prices and shortages are already putting pressure on business in the eurozone.

In the latest move, Russian state energy company Gazprom said it would cut off natural gas supplies to Europe for three days at the end of the month.

Gas prices in Europe have been rising for nearly five months. Europe rushes to refuel for winter.

Flash PMI figures from Great Britain and the US are expected on Tuesday.

Economists polled by Reuters expect the Federal Reserve to raise interest rates by 50 basis points in September as inflation peaks and worries about a recession grow, but risks loom higher.

Chart: Reuters poll – Probability of US recession – https://fingfx.thomsonreuters.com/gfx/polling/egpbkdwndvq/Reuters%20Poll-%20U.S.%20recession%20probabilities.PNG

The headline news of the day was that China cut its key lending rate on top of last week’s easing measures as Beijing scrambles to revive an economy hobbled by a real estate crisis and a resurgence of COVID-19 cases.

Growing pains weighed on Asian shares on Monday, while worries about China’s economy dragged the yuan to a 23-month low.

Key developments that could impact markets on Monday:

China cuts lending to revive faltering economy:

Nord Stream 1 pipeline shuts down for three days in final fuel surge to Europe:

Asian stocks fall: