Geoffrey Smith 

Investing.com – Inflation concerns are fed by energy prices, and interest rate rises feed into falling stock markets. This pattern has been established overnight in Europe and will continue to be observed when U.S. stock markets open. ADP will publish its private sector hiring report on September 2 days before the official Labor Market Report for September. Constellation Brands’ (NYSE:) earnings report is out and Warby Parker faces a challenging task after a successful debut. This is what you should know about Wednesday’s financial markets. 6th October.

1. Europe inflation worries drive yields higher, stocks lower

Overnight, European stock and bond markets were ravaged by fears of stagflation as power prices hit new highs. German benchmark bonds have a yield as high as 10.1%, which is the highest it has been since May. However, U.K equivalents are at 1.3%, their highest for more than two decades.

U.K. gas prices reached an all-time record of 330 pence per therm. That’s roughly 97 euros/megawatt hour.

The economic slowdown was evident in Germany, where manufacturing orders fell 7.7% over August. This is largely because of the importance of the automotive industry.

Russia, which is still waiting to receive European regulatory approval for gas flows through the Nord Stream 2 pipe, continues to play hardball. However, a Kremlin spokesperson said that the European policymakers are to blame for the lack of supply.

2. ADP’s warming up act for the employment report

In the U.S., Treasury yields increased amid uncertainty surrounding the debt ceiling debate as well as fears that high global energy prices would also be passed through to inflation in America through the transmission route of natural gas.

The U.S. benchmark price rose 0.9% overnight, to $6.369/mm Btu. This is despite continued demand from China and Europe for liquefied gas exports. They’ve now more than tripled in the last year.

The economic focus later will be on ADP’s private payrolls report, which is expected to show an acceleration in hiring to 428,000 last month from 374,000 in August.

3. Stocks will give up gains on Tuesday at open

Under fresh energy price pressure, U.S. stocks will slump at the open. Overnight, the 10-year Treasury benchmark yield rose to 1.57% before stabilizing at 1.54% by 6 :15 ET.

The cash index fell 1.0% or 349 points. were likewise down 1.2%, reversing all of the previous session’s gains, and were down 1.4%.

Stocks likely to be in focus include Facebook (NASDAQ:), which remains under pressure after critical comments from Congressmen and -women on Tuesday in response to whistleblower Frances Haugen’s testimony. Warby Parker stock is also likely to be under scrutiny, as it rose sharply on Tuesday’s market debut.  Brewer Constellation Brands releases earnings.

4. The world is seeing rising interest rates

Overnight, the global tightening of monetary policy continued as Reserve Bank of New Zealand increased its key rate 25 basis points, to 0.5%. This was in response to inflationary pressures.

Iceland also followed the lead and raised its benchmark rate from 1.25% to 1.50%.

Poland’s national bank will be under increasing pressure for raising rates. The policy of Hungary, Czechia, and Romania has been tightened in the last days. The Polish zloty rose 0.7% to the euro amid expectation that the NBP would follow their lead, despite obvious resistance.

The cryptocurrency market has remained above $50,000. However, alt-coins are under increasing pressure.

5. EIA inventory data: oil hits new heights

The perception that OPEC, its partners and the rest of the oil industry have made the world fuel-starved for the next few months has supported the rise in crude oil prices. They are refusing to increase production.

This belief is strong despite an apparent second week of inventory increases, although it was small at just over 1 million barrels. According to the American Petroleum Institute, this perception has lasted. The government’s data are due at 1030 AM ET, as usual.

U.S. crude was at $78.55/barrel at 06:30 ET. Futures were 1.2% higher at $82.23/barrel at 8:22 AM ET.