By Peter Nurse

Investing.com - European stock markets are expected to open sharply lower Wednesday, continuing the global move lower pressured by renewed energy concerns as well as the deteriorating growth outlook.

At 02:00 ET (06:00 GMT), the DAX futures contract in Germany traded 1% lower, CAC 40 futures in France dropped 0.5%, and the FTSE 100 futures contract in the U.K. fell 0.6%.

European equities are set to follow Asian markets lower after Wall Street ended on a negative note, with the benchmark S&P 500 index falling to its lowest level this year, dropping for the sixth straight session, its longest losing streak since February 2020.

Investors are concerned that aggressive monetary tightening to combat soaring inflation will push much of the global economy into recession, fears that have been exacerbated by more hawkish talk from Federal Reserve officials.

The European Central Bank has also embarked on a series of interest rate hikes to combat inflation at historic highs, despite the region suffering from slowing growth and an energy crisis in the wake of Russia’s invasion of Ukraine.

Influential investment bank Goldman Sachs expects the ECB to hike interest rates by 75 basis points at its October and December meetings, adding to raised borrowing costs of 125 basis points at its last two meetings.

The forward-looking German GfK consumer climate index fell sharply to -42.5 in October, a drop from the revised lower -36.8 the previous month, dropping to another record low.

Adding to the region’s woes was the news late Tuesday that Russian gas monopoly Gazprom (MCX:GAZP) may seek to add the Ukrainian gas pipeline operator Naftogaz Ukrainy to Russia's list of sanctioned entities.

This would prevent it from paying Ukraine its usual transit fees, a move that would pave the way for the suspension of physical shipments, cutting off almost all of its remaining supplies to the EU.

Russia’s energy conflict with Europe had already escalated earlier Tuesday after Nord Stream pipelines, that bring natural gas from Russia to Europe via the Baltic Sea, were wrecked in suspected sabotage.

Oil prices fell sharply Wednesday as a build in U.S. crude stocks and further strength in the U.S. dollar outweighed any potential supply disruptions caused by Hurricane Ian.

Data from the American Petroleum Institute, released late Tuesday, showed U.S. crude stockpiles rose by much more than expected last week, up 4 million barrels, raising concerns of slowing demand at the world’s largest consumer.

Traders will be looking for official confirmation from Energy Information Administration data later in the session.