(Bloomberg) — Stocks and U.S. equity futures fell Monday, while Treasury yields rose, as a jump in energy costs again highlighted the inflation concerns that are weighing on the global economy.
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Japanese shares slid along with S&P 500 and Nasdaq 100 contracts. Treasuries dropped on the prospect of rapid Federal Reserve monetary tightening to curb price pressures, pushing the U.S. 10-year yield to about 2.86%. A gauge of the dollar advanced and the yen retreated.
Natural gas and oil climbed, partly on risks from Russia’s war in Ukraine. The possibility of a de facto European Union embargo on Russian gas and the threat of some curbs on crude in Europe’s next sanctions package spurred both commodities. U.S. natural gas prices hit a more than 13-year high.
China is due to release quarterly growth data and activity indicators for March, which may provide hints about the economic damage from Covid lockdowns. Officials cut the reserve requirement ratio Friday but refrained from lowering interest rates in a cautious approach to policy easing.
China’s Covid-linked restrictions are snarling supply chains and stoking global inflation pressures. The latter were already exacerbated by disruptions to commodity flows due to the war and Russia’s isolation. Concern is growing that the U.S. economy faces a downturn from the Fed’s pivot toward aggressive policy tightening to contain the cost of living.
“Major regime change is rarely smooth in either geopolitics or economics, and markets are under-pricing these risks,” Eric Robertsen, chief strategist at Standard Chartered Bank Plc, wrote in a note. “We are increasingly concerned about a summer of turbulence and volatility.”
In Shanghai, officials published plans to resume production after a prolonged lockdown. Businesses should adopt so-called closed-loop management, where workers live on-site and are tested regularly, they said.
What to watch this week:
Earnings include American Express, Bank of America, Bank of New York Mellon, China Telecom, IBM, Johnson & Johnson, Netflix, Tesla
China GDP, economic activity data, Monday
Easter Monday market closures in the U.K., much of Europe
IMF/World Bank spring meetings start, Monday
St. Louis Fed President James Bullard to speak, Monday
Chicago Fed President Charles Evans to speak, Tuesday
EIA crude oil inventory report, Wednesday
China loan prime rates, Wednesday
Federal Reserve Beige Book, Wednesday
French presidential election debate, Wednesday
San Francisco Fed President Mary Daly, Chicago Fed President Charles Evans, due to speak, Wednesday
Eurozone CPI, U.S. initial jobless claims, Thursday
Fed Chair Jerome Powell, ECB President Christine Lagarde discuss global economy at IMF event, Thursday
Manufacturing PMIs: Eurozone, France, Germany, U.K, Friday
Bank of England’s Andrew Bailey to speak, Friday
Some of the main moves in markets:
S&P 500 futures fell 0.6% as of 9:29 a.m. in Tokyo. The S&P 500 dropped 1.2% on Thursday
Nasdaq 100 futures declined 1.1%. The Nasdaq 100 slipped 2.3% on Thursday
Japan’s Topix index fell 1%
South Korea’s Kospi lost 0.2%
The U.S. 10-year yield rose three basis points to 2.86%
The Bloomberg Dollar Spot Index rose 0.2%
The euro was at $1.0805
The yen was at 126.75 per dollar, down 0.2%
The offshore yuan was at 6.3844 per dollar
West Texas Intermediate crude rose 0.8% to $107.78 per barrel
Gold was at $1,985.93 an ounce, up 0.4%
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