A look at the day ahead in European and global markets from Tom

Westbrook

Markets' sparkling recovery from early August's sell-off has

hit an air pocket, with Asian shares down on Wednesday and

Tuesday's small drop leaving the S&P 500 a day short of

matching a 20-year-old winning streak.

A yen at 145.5 per dollar, and rising, sapped sentiment in

Japanese stocks and news that Walmart ( WMT ) is looking to sell

its JD.com ( JD ) stake sent the Chinese online retailer's

shares slumping in Hong Kong, after what had been a big bounce

on an upbeat earnings report.

Market momentum is stumbling more or less where the selling

began two weeks ago and brings us full circle on the economic

outlook: waiting on data to gauge the risk of recession and

watching polling to gauge the U.S. presidential contest.

Former U.S. President Barack Obama returned to the national

stage on Tuesday night to boost his longtime Democratic ally

Kamala Harris in her 11th-hour presidential bid against

Republican Donald Trump.

Fed minutes are due later on Wednesday, along with revisions

to U.S. labour data. Goldman Sachs expects a downward revision

in the range of 600,000 to 1 million jobs added, although it

argues this would overstate the weakness of the labour market.

Much will also depend on the U.S. labour report due on Sept.

6, with the job market in greater focus now that inflation seems

to be trending lower.

Rates markets have fully priced a 25 basis point U.S.

interest rate cut for September and a near 1/3 chance of a 50 bp

cut, driving the dollar down steadily on just about everything.

Gold has notched records above $2,500 an ounce this week and

the euro is in unfamiliar territory at $1.11.

Some analysts see risks if the labour market seems stronger

than expected, or if Fed Chair Jerome Powell doesn't sound very

dovish in a speech he is due to give at Jackson Hole on Friday.

CNN's fear and greed index, derived from conditions in

stock, options and credit markets, has recovered to neutral from

"extreme fear" just a week ago. But investors seem to want new

data to validate the benign outlook before plunging in again.

Data in Asia on Wednesday showed Japanese exports lagging

expectations, while South Korean exports for the first 20 days

of August went up 18.5% from a year earlier.

Key developments that could influence markets on Wednesday:

Economics: U.S. labour data revisions

Policy: U.S. Federal Reserve minutes

(Editing by Muralikumar Anantharaman)