European stocks and US index futures declined as concerns about slowing growth and persistently high inflation kept investors on the edge.
Contracts on the S&P 500 Index fell 0.6% after the underlying gauge posted the biggest weekly loss since February. Iron ore to aluminum rallied amid expectations for higher demand. Oil dropped before an OPEC+ meeting to discuss production policy. Asian stocks retreated as investors watched developments at the debt-ridden China Evergrande Group.
Global markets have taken a risk-off turn as the post-pandemic recovery stalls amid a supply crunch in everything from semiconductors to coffee. A spreading energy crunch has added to concern elevated inflation will be longer-lasting than policy makers predict. Risks are multiplying at a time investors are bracing for Federal Reserve tapering as early as next month.
“The global chip and energy shortage is getting worse, the inflation is rising, the recovery may be slowing, and that puts central banks between a rock and a hard place,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “The best they could do is to do nothing, or to tighten their monetary policy to avoid losing control on the economy.”
Oil futures posted losses on Monday as some traders speculated the OPEC + alliance, led by Saudi Arabia and Russia, may have to consider boosting output in November by more than the planned 400 000 barrels a day. West Texas Intermediate contract still held above $75 per barrel.
Treasury yields were steady, with the 10-year trading below 1.47%. The dollar rose modestly, after two days of losses.
In Europe, banks and carmakers led losses in the benchmark Stoxx 600 gauge. Wm Morrison Supermarkets Plc declined 3.8% after CD&R emerged as the highest bidder for the British grocer, though analysts said the offer terms resulting from the auction process were disappointing.
Japanese and Hong Kong shares dropped after trading of Evergrande shares was suspended in Hong Kong, along with those of its property management arm, amid reports of a unit stake sale. Mainland Chinese markets are closed through Thursday for the Golden Week holidays.
Asia investors are watching for further news on Evergrande, which faces a maturing bond with little wiggle room for payment. Hopson Development Holdings Ltd. — whose shares were also suspended Monday morning — plans to acquire a 51% stake in the beleaguered lender’s property-management unit for more than HK$40 billion ($5.1 billion), Cailian reported, citing unidentified people.
Here are some events to watch this week:
- OPEC+ meets virtually Monday to review output policy amid a global energy crunch.
- Reserve Bank of Australia policy decision Tuesday
- Rate decision in New Zealand on Wednesday
- Reserve Bank of India monetary policy decision on Friday
- The US Labour Department releases unemployment and job creation data Friday
- Annual Nobel announcements start on Monday, with the Peace Prize being awarded on Friday
Some of the main moves in markets:
- The Stoxx Europe 600 fell 0.6% as of 8:37 a.m. London time
- Futures on the S&P 500 fell 0.6%
- Futures on the Nasdaq 100 fell 0.8%
- Futures on the Dow Jones Industrial Average fell 0.5%
- The MSCI Asia Pacific Index fell 0.6%
- The MSCI Emerging Markets Index fell 0.6%
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was little changed at $1.1601
- The Japanese yen was little changed at 111.15 per dollar
- The offshore yuan fell 0.3% to 6.4543 per dollar
- The British pound was little changed at $1.3542
- The yield on 10-year Treasuries advanced two basis points to 1.48%
- Germany’s 10-year yield was little changed at -0.22%
- Britain’s 10-year yield advanced one basis point to 1.01%
- Brent crude fell 0.6% to $78.79 a barrel
- Spot gold fell 0.4% to $1 753.78 an ounce