European stocks extended declines Wednesday but Wall Street could be looking at a modest rebound after the biggest single-day loss for U.S. markets in three weeks amid ongoing concern over President Donald Trump's handling of the crisis in North Korea and the potential costs of Hurricanes in Texas, Louisiana and Florida.
The Stoxx Europe 600 index, the broadest measure of regional share prices, was marked 0.34% lower by mid-morning in Frankfurt as benchmarks around the region followed Asia markets into the red and gold prices tested another 11-month high amid the flight-to-safety trading that took the price of the bullion to just under $1,340 an ounce.
Wall Street could reverse the current momentum, however, with the Dow Jones Industrial Average priced to gain around 30 points at the opening bell, according to U.S. equity futures, after yesterday's 1% sell-off took more than 234 points from the benchmark by the end of the session. The S&P 500, which fell 0.93% for its biggest one-day decline since early August, is poised to rise around 2.5 points at the bell while the Nasdaq may gain back around 9 of the near 60 points it lost in Tuesday's selling.
Benchmark 10-year Treasury yields extended their declines overnight, falling to a near 10-month low of 2.07% as traders piled cash into government bond positions and added further to the move after U.S. Federal Reserve rate-setter Lael Brainard said inflation was "well below" the central bank's target. The dollar index, a measure of the greenback's strength against a basket of six global currencies, was marked 0.11% lower at 92.15 by 05:30 Eastern Time.
Global oil prices were also under pressure as investors re-set assumptions for near-term demand following the damage from Hurricane Harvey in and around the heart of the U.S. petrochemicals industry in Houston and the broader Gulf region.
West Texas Intermediate crude futures for October delivery were marked 10 cents lower from their Tuesday close in New York at $48.56 per barrel at the start of European trading while Brent contracts for November were seen 0.48% lower at $53.12.
In Europe, Daimler AG (DDAIY) led auto stocks higher amid speculation that the Mercedes maker is planning a change in its corporate structure that could lead to the separation of its €31 billion ($37 billion) truck and bus unit.
Daimler shares were marked 2.8% higher in the opening 90 minutes of trading in Frankfurt and changing hands at €63.95 each, the highest since July 19, after Goldman Sachs analysts upgraded the German automaker to "Buy" with 12-month price target of €81.00. The move lifted rival automakers BMW AG and Volkswagen AG, the world's second-biggest carmaker, to the top of the DAX performance index leaderboard and boost share prices for French carmakers Renault SA and Peugeot SA 2.1% and 1.3% higher respectively.
Reinsurance groups were also active after the U.S. National Hurricane Center said Wednesday that Hurricane Irma is a "potentially catastrophic" storm that could bring 185 mile-per-hour winds to the coast of South Florida later this week as it gathers pace towards the Puerto Rico and the Virgin Islands.
Irma's eye passed over the Caribbean island of Barbuda, some 1,300 miles southeast of Miami, early Wednesday and could be only the fourth category 5 hurricane to hit the U.S. mainland since the early 1930s - the last of which, Hurricane Andrew, caused around $50 billion in damage in 2017 dollar terms.
Scor SE (SCRYY) was marked 1.6% lower in Paris at €33.95 while German rivals Munich Re (MURGY) and Hannover Re (HVRRY) were each seen 0.7% and 0.8% lower respectively against a 0.3% decline for the DAX performance index. In Zurich, Swiss Re (SSREY) , which makes up the so-called "Big Four" of European reinsurance groups, traded 1.6% lower at Sfr82.94 each against a 0.5% loss for the SMI benchmark.
Insurance stocks led the S&P 500 lower Tuesday, with companies exposed to markets in Florida, such as Heritage Insurance Holdings (HRTG) , plunging more than 16% on heavy volume to a record low $9.35 each, and HCI Group HCI, which slumped 20% to end the day at $30.94. Larger, more nationally-focused insurers, including Travelers Co. (TRV) and Progressive Corp. (PGR) fell 3.7% and 3.4% respectively.
Stocks in Asia followed Wall Street's gloomy assessment of global geopolitics, with the MSCI Asia ex-Japan index falling 0.1% and Japan's Nikkei 225 slumping to a near four-month low as the yen gained against the dollar and held down any chance of gains for export-focused stocks.
The yen itself had its biggest single-day gain in three weeks, rising to has high as 1.8030 before easing later in the session as falling U.S. Treasury bond yields clipped the dollar's gains.
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