European markets open to close; the pound falls against the dollar

UK bond yields set to see record monthly rise

Yields on UK government bonds are on course for the biggest monthly rise in Refinitiv and Bank of England data dating back to 1957, according to Reuters analysis.

The yield on 10-year gilts has risen 131 basis points so far in September, with selling intensifying on Friday after the government announced major tax cuts. Yields move inversely to prices.

“Speed [of gilt yield rises] was quite breathtaking. We haven’t seen moves like this since the financial crisis,” Craig Inches, head of rates and cash at Royal London Asset Management, told CNBC’s “Squawk Box Europe.”

“The problem you have now is that the markets are very tight, the liquidity is very low, and a lot of market participants are stuck in long positions. There have been a lot of people trying to call the top in the interest rate profile and they were shut out of the markets,” he said.

UK economy: ‘Something has to break,’ says bank’s CIO

As the pound tumbles against the dollar, hitting a record low in the early hours of Monday, the UK is in a position where “something has to snap”, according to Fahad Kamal, CIO of Kleinwort Hambros.

“Sterling is the thing that seems to be under a lot of pressure right now,” Kamal told CNBC’s “Squawk Box Europe.”

Fall of the pound:

Falling energy prices are also unlikely to lower inflation anytime soon, according to the CIO.

“The drop in the price of oil will help, but ultimately inflation has gone beyond the price of oil and commodity prices, it’s much deeper and more entrenched and tied to things like rent and wages,” Kamal said.

—Hannah Ward-Glenton

Germany’s business climate plummets in September

German economic sentiment deteriorated rapidly in September, according to the latest ifo institute survey.

The ifo business climate index fell to 84.3 points this month, its lowest value since May 2020 and down from 88.6 points in August.

“The decline affects all four sectors of the economy. Companies rated their current business as significantly worse,” said Clemens Fuest, president of the ifo institute.

“Pessimism about the coming months has definitely increased; in retail, expectations have fallen to a record low. The German economy is slipping into recession.”

-Elliot Smith

Brent crude slides below $85 a barrel as dollar soars

Brent crude fell below $85 a barrel on Monday as recession fears grew and the U.S. dollar surged.

Brent futures for November settlement were trading down more than 1% around $84.92 at 8 a.m. London time. West Texas Intermediate futures also fell to trade around $77.93.

Central banks around the world, including the United States and the United Kingdom, continue to raise interest rates in an effort to fight inflation.

You can read the full story on CNBC here.

—Hannah Ward-Glenton

Stocks in motion: Belimo up 7%, K+S down 8%

Shares of Swiss heating and ventilation maker Belimo Holding soared more than 7% in early trading after Berenberg upgraded the stock to “buy” and raised its price target, citing growing demand for home renovations .

At the bottom of the Stoxx 600, German chemical company K+S fell 8%.

-Elliot Smith

Giorgia Meloni and her far-right Brothers of Italy party vote top in Italian elections, exit poll shows

Giorgia Meloni seen speaking during the campaign. Giorgia Meloni, leader of the nationalist and right-wing conservative Brothers of Italy (Fratelli of Italy, FDI) party organized the concluding electoral rally in Arenile, in the left-wing district of Bagnoli, in Naples.

Sopa Pictures | Light flare | Getty Images

Italians are set to elect the country’s first female prime minister and the first far-right-led government since the end of World War II.

Giorgia Meloni’s Fratelli d’Italia (Brothers of Italy) party is expected to win 26.4% of the vote, according to an exit poll early Monday morning. The party is part of a broad right-wing coalition with the Lega, led by Matteo Salvini, Silvio Berlusconi’s Forza Italia and a more minor coalition partner, Noi Moderati.

This alliance should collect 44.43% of the vote, according to the exit polls, enough to obtain a parliamentary majority with the center-left bloc at 26.57%. The first projections of the actual election results are expected on Monday morning.

Learn more about the story here

British pound hits record high against dollar as Asia-Pacific currencies also weaken

CNBC Pro: Morningstar reveals its top global high-dividend stocks — and gives three 30% hikes

Morningstar unveiled its selection of global stocks with the highest dividend yields, saying they stand out in an environment where many companies may not be able to sustain their dividends due to “economic pressures”.

Pro subscribers can learn more here.

—Ganesh Rao

CNBC Pro: Dan Niles predicts when the S&P 500 could bottom and reveals how he profited from it this year

Stocks prepare to test their lows in the last trading week of September

Heading into the last trading week of September, the Dow Jones and S&P 500 are each down about 6% for the month, while the Nasdaq is down 8%.

The Dow and S&P are now 1.2% and 1.6%, respectively, above their mid-June lows. The Nasdaq is 2.9% above its low.

European markets: here are the opening calls

European stocks are expected to open in negative territory on Wednesday as investors react to the latest US inflation data.

Britain’s FTSE index is expected to open down 47 points to 7,341, Germany’s DAX down 86 points to 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB down 132 points to 22,010 , according to data from IG.

Global markets fell following a stronger-than-expected U.S. consumer price index report for August, which showed prices rose 0.1% for the month and by 8.3% a year in August, the Bureau of Labor Statistics reported on Tuesday, defying economists’ expectations that headline inflation would fall 0.1% month-over-month.

Core CPI, which excludes volatile food and energy costs, rose 0.6% from July and 6.3% from August 2021.

UK Inflation figures for August are due and Eurozone Industrial Production for July will be released.

—Holly Ellyatt

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