© Reuters. FILE PHOTO: A man wearing a protective mask, against the backdrop of the coronavirus disease epidemic (COVID-19), walks past an electronic board showing the Shanghai Composite index, Nikkei index and Dow Jones Industrial Average outside a brokerage house in Tokyo, Japan, March 7,
From Wayne Cole
SYDNEY (Reuters) – Asian stocks fell and the dollar peaked on two decades on Monday as US stock futures continued to decline amid worries about interest rates, while the tightening of the blockade in Shanghai raised concerns about global economic growth and recovery.
“A series of interest rate hikes and hawk communication have emerged amid sharply declining Chinese and European activity, new plans for Russian energy bans and continued supply pressures,” warned analysts at Barclays (LON :).
“This creates a bleak outlook for sustained inflation, which is forcing central banks to raise interest rates despite a sharp slowdown in growth.
Chinese trade data for April were not as bad as they feared, with exports up 3.9% year-on-year and imports remaining.
However, China’s policy of zero COVID-19 has not weakened, with Shanghai tightening its blockade of COVID across the city to 25 million people.
Speculation that Russian President Vladimir Putin may declare war on Ukraine to call up reserves during his speech at Victory Day celebrations has also hurt market sentiment. So far, Putin has characterized Russia’s actions in Ukraine as a “special military operation” rather than a war.
stock futures were down 1.1%, while Nasdaq futures fell 1.0%. US 10-year bond yields rose to a new high of 3.15%.
EUROSTOXX 50 futures fell 1.5% and futures fell 0.7%.
The broadest MSCI index of Asia-Pacific stocks outside Japan fell 1.3% and 2.4%, respectively. China’s blue chips fell 0.8 percent as the yuan hit another 18-month low to trade at $ 6.7049 a dollar.
Investors were also tense ahead of Wednesday’s U.S. consumer price report, which is expected to release only a slight drop in inflation and certainly does not stop the Federal Reserve from rising by at least 50 basis points in June.
Core inflation is actually seen to rise by 0.4% in April, compared to 0.3% in the previous month, even when the annual rate is declining slightly due to core effects.
“In the first quarter, the annual monthly change in the core CPI was 5.6%,” analysts from ANZ said. “This is too high for the Fed and we believe that the FOMC will not relax in terms of inflation until the core number is reduced to around 0.2% m / m on a sustainable basis.
“The Fed is not the only central bank facing inflationary pressures. Increasingly, the ECB’s guidelines are becoming much more hawkish.”
DOLLAR IN SEARCH
Fed futures are valued at interest rates reaching 1.75-2.0% in July, from the current 0.75-1.0% and rising to about 3% by the end of the year.
This week, the diary is full of Fed speakers, which will give them many opportunities to continue with the hawk’s chorus.
Aggressive interest rate forecasts have led to 20-year peaks in the US dollar to 104,080.
“The risk appetite is fragile and yield spreads continue to suggest a further rise in the dollar index,” said Sean Callow, senior currency strategist at Westpac.
“We are looking for a constant demand for DXY in downturns, with 104 already under investigation and still having the potential to move to 107 multi-week.”
The euro remained at $ 1.0510 and just above its recent low of $ 1.0481, while the dollar was well controlled against the Japanese yen at 131.07.
Oil prices fell after the Group of Seven (G7) on Sunday pledged to ban or phase out Russian oil imports over time.
After an initial decline, it was last quoted 12 cents higher at $ 112.51, while adding 4 cents to $ 109.81.
Gold was idle at $ 1,872 an ounce after struggling to gain some strength as a safe haven.
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