Pound sterling rises as traders ponder the agenda of new British Prime Minister Truss

European stocks rose as investors weighed in on leaders' reactions to the region's growing energy crisis ahead of the European Central Bank's policy meeting later this week. U.S. stock futures rose.

Retailers and automobiles were among the most efficient sectors in the Stoxx Europe 600 index, while energy and healthcare lagged behind. The S&P 500 and Nasdaq 100 contracts rose more than 0.8%. Trading on Wall Street will resume later after the Labor Day holiday. Asian exchanges have been mixed, rising in China but declining in Hong Kong.

The pound rebounded as traders weighed on the agenda of Britain's new prime minister, Liz Truss, who plans to soften electricity bills as part of a policy that could cost £130 billion over 18 months. The dollar indicator fell lower. 

Treasury bonds sank, led by shorter maturities, bringing the two-year yield to 3.46%. The oil rally, triggered by OPEC+ production cuts, cooled demand risks due to Covid lockdowns in China.

Borrowing costs are rising in a host of countries, tightening financial conditions around the world and putting pressure on stocks and bonds. The focus is shifting to the ECB, and economists at some of Wall Street's top banks expect it to announce a 75 basis point hike on Thursday.

"Many clients are asking if we have seen the bottom yet and are we entering a global recession?" grace Tam, chief investment adviser at BNP Paribas Wealth Management Hong Kong, told Bloomberg Television. "We believe that the risk of a global recession, especially next year, is actually quite high" and that the energy crisis is "not fully appreciated" in the markets, she said.

Australia has pursued its fourth interest rate hike of 50 basis points and confirmed that it is not on a predetermined path in a bid to curb inflation.

The offshore yuan has fluctuated since China's announcement of a reduction in the amount of foreign currency deposits that banks must set aside as reserves. Officials in China also plan to accelerate stimulus by bolstering support for an economy saddled with covid-lockdowns, a declining property and electricity shortages.

Elsewhere, bitcoin has fallen below the $20,000 level again, while gold has made a rise.

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