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Financial markets started the week on a risk-off mood, as the Russian gas cut off worsened the European energy crisis and the region’s economic outlook. 

Investors ended the week with mixed results, with sentiment supported by data showing employment growth in the US slowed down in August, in line with expectations, while the jobless rate rose by 0.2 p. p. to 3.7%. In the eurozone, producer prices (PPI) rose by 37.9% y/y in July, fueling concerns that inflationary pressures are building up.

Risk aversion continued to set the tone across markets on Thursday, following the imposition of lockdown measures in some big urban areas in China. In the US, new weekly jobless claims and the manufacturing ISM survey surprised positively, which, in turn, exacerbated fears among investors of more aggressive interest rate hikes.

During a volatile session, financial markets closed with mixed results, balancing out another upside surprise in HICP inflation data in the eurozone (up by 9.1% y/y in August) with signs that job creation in the US may have moderated in August (according to the ADP survey). 

Investors continued to trade with a risk-off mode, taking on board new hawkish comments from central bank officials and data showing job openings in the US unexpectedly rose in July. In addition, the flash HICP readings for both Spain and Germany showed inflation remained elevated in August (the eurozone aggregate will be released today).

Investors continued to trade with caution at the start of the week, still digesting the hawkish rhetoric at Jackson Hole conference last weekend and taking on board mixed signals from ECB officials, after chief economist Philip Lane cautioned against outsized interest rate hikes, calling instead for a "steady pace" until the end of its hiking cycle.

Volatility and risk aversion continued to dominate across markets during the last session of the week, following hawkish signals from central bank officials in Jackson Hole and a further increase in natural gas prices in Europe. 

Investors continued to readjust their expectations about the future pace of monetary policy tightening, after data showed real GDP fell by 0.2% q/q in the US in Q2, the second consecutive quarterly decline.

Demand for riskier assets dominated investors mood on Wednesday, following a widely expected interest rate increase by the Federal Reserve and positive signals from various corporate earnings result in both Europe and the US. Adding to the positive sentiment, orders placed with US factories unexpectedly rose in June.

Risk aversion continued to set the tone across financial markets on Tuesday as investors took position ahead of the Federal Reserve’s policy meeting today, with money markets pricing another 75 bp hike in the policy rate.

Investors started the week trading cautiously, taking on board weak sentiment data, hawkish commentary by some ECB officials and news reporting that Russia is due to reduce gas supplies to Europe.

In the last session of the week, investors' recession fears increased following the worse-than-expected economic sentiment data. In particular, July's Composite PMIs for the euro area and the US fell below the 50 points threshold, with decreases in both the services and manufacturing indices.