The pan-European Stoxx 600 nudged 0.5% higher in early trade, with retail stocks jumping 2.9% to lead gains as most sectors nudged into positive territory. Oil and gas stocks slipped 0.7%.

European markets closed lower on Monday as investors pondered a raft of economic challenges the region faces, with the halted gas supply from Russia dominating market sentiment Monday.

The sharp downward moves for risk assets came after Russia’s state-owned energy giant Gazprom announced that gas flows to Europe via the Nord Stream 1 pipeline would be halted indefinitely, citing additional repair requirements. The euro fell sharply while European gas prices soared.

Gas flows via Nord Stream 1 will not resume until Siemens Energy repairs faulty equipment, Gazprom’s deputy CEO Vitaly Markelov told Reuters on Tuesday.
The Reserve Bank of Australia is expected to raise interest rates Tuesday by another 0.5 percentage points on the back of a “fully employed labor market, a massive inflation overshoot and the fact that financial conditions are still highly accommodative,” Goldman Sachs chief economist for Australia and New Zealand Andrew Boak said.

Boak told CNBC’s “Squawk Box Asia” markets do not expect the central bank to soften its position on reining in inflation when it announces its rate decision at 2:30 p.m. Australian Eastern Standard Time.

“I think markets will be particularly sensitive to any sort of signal the RBA is thinking about stepping down the pace of tightening to say 25 basis point increments,” Boak said.

“I think key language will be retained around expecting to tighten further over the coming months. But also the caveat that policy is not on a preset path.”

There are risks with continued interest rate lifts such as the “disorderly unwind in the housing market” but Boak says “that is not our central scenario.”