A look at the day ahead in markets from Julien Ponthus.
Much of the market rebound from the lows hit on June 17 was credited to data being arguably bad enough to encourage central banks to go easy on their aggressive policy tightening plans yet good enough to suggest a recession could be avoided.
But dire U.S. consumer confidence data on Tuesday seems to have tipped the balance towards economic contraction just as Federal Reserve policymakers have reiterated their promise to swiftly raise interest rates.
The prospect of such a toxic combination triggered a broad Wall Street sell-off, hitting Asian stocks and wiping out any remaining optimism left over from China easing quarantine rules for international travellers.
European stock futures are firmly in the red and for the old continent, the gloom on America's Main Street is only too familiar: French and German consumer confidence dropped sharply in June on the back of surging energy and food prices.
Anecdotal evidence of hardship is widespread: the boss of British supermarket group Sainsbury's told Reuters that cash-strapped Britons were "watching every penny and every pound" and buying more cheap frozen food to cope with "unprecedented" soaring living costs.
And it's not only consumers that are forced to adjust.
Worsening financing markets have forced CEOs to reconsider planned deals, such as Reckitt Benckiser Group's sale of its infant nutrition unit.
Investment banks are indeed becoming reluctant to underwriting large chunks of financing which sets M&A for an arid season.
As for the immediate future, traders will probably be inclined to avoid taking strong directional bets before a star-studded central bank panel at the ECB's forum in Portugal.
Inflation data in Germany will also be a big factor.
Key developments that should provide more direction to markets on Wednesday -Fashion retailer H&M's second-quarter profit beats expectations -German manufacturers see materials shortages extending into 2023 -Dutch June manufacturing confidence down to +8.1 points -Japan May retail sales rise faster than expected as COVID curbs ease -Thai factory output unexpectedly drops in May, seen steady in June -Australia retail sales beat forecasts in May, higher prices a factor -Spain flash June CPI.
(Reporting by Julien Ponthus)