European markets head for lower open as negative sentiment persists

LONDON — European stocks are expected to open lower Wednesday, continuing the regional trend downward this week.

The U.K.’s FTSE index is seen 26 points lower at 7,394, Germany’s DAX down 34 points at 13,421, France’s CAC 40 down 29 points at 6,385 and Italy’s FTSE MIB 44 points lower at 22,290, according to data from IG.

The lower open for European stocks comes after markets pulled back slightly on Tuesday, tracking risk-off sentiment globally as investors assess whether last month’s rally has further to run.

In the United States, the three major averages fell for a second consecutive day yesterday, although Dow Jones Industrial Average futures were higher last night.

In regular hours trading, House Speaker Nancy Pelosi’s controversial visit to Taiwan weighed on investors, who worried it would further strain already tense U.S.-China relations. China had spent weeks warning her not to make the trip.

Markets fell further after three Federal Reserve presidents hinted that further rate hikes would be necessary to combat high inflation.

Overnight, shares in the Asia-Pacific were mostly higher Wednesday, with mainland China markets leading gains despite Pelosi’s trip to Taiwan, which is being closely watched by Beijing.

China’s Foreign Ministry spokesperson Hua Chunying tweeted that Pelosi’s visit was a “major political provocation,” while a spokesperson for the People’s Liberation Army’s Eastern Theatre Command said it would conduct “a series of joint military operations around the Taiwan Island from the evening of August 2.” Those operations include long-range combat fire live shooting in the Taiwan Strait and conventional missile firepower test launching, the statement said.

It’s a busy day for earnings in Europe, with Commerzbank, SocGen, BMW, Banco BPM, Siemens Healthineers and Veolia and Wolters Kluwer among those companies reporting. On the data front, euro zone producer prices and retail sales data for June are set to be released.

— CNBC’s Tanaya Macheel and Abigail Ng contributed to this report.