Stock Groups

Asia stocks in gloomy mood as Wall St futures slip -Breaking


© Reuters. FILE PHOTO A protective mask worn by a man walks past an electronic display board showing the Dow Jones Industrial Average, Nikkei Index, Shanghai Composite index, and Nikkei index outside of a Tokyo brokerage, Japan. March 7, 2007.

Wayne Cole

SYDNEY, (Reuters) – Asian markets started Monday with a rocky start. U.S. stock market futures fell on Monday due to rate concerns and tightening in Shanghai fueled fears about possible global economic growth.

Analysts at the Institute for Strategic Analysis warned, “A string of rate rises and hawkish communication occurred against a background of plummeting Chinese activity and European activity. New plans for Russian Energy Bans and continual supply-side pressures.” Barclays (LON:).

“This raises concerns about persistent inflation, which could force central banks into raising rates in spite of sharply slowing economic growth.

China’s zero COVID policies were not slowing down. Shanghai tightened the 25 million resident COVID lockdown.

Stock futures saw a 0.6% drop, and Nasdaq futures lost 0.7%. The U.S. 10-year bond options also fell 8 ticks.

The futures closed at 26,745 on Friday, compared with a close cash of 27,003 last Friday.

Investors also felt nervous ahead of Wednesday’s U.S. Consumer Price Report. While there is a small easing in inflation forecast for the report, it was not enough to stop the Federal Reserve hiking at least 50 basis point in June.

In fact, core inflation rose 0.4% in April from 0.3% last month. However, the annual pace is slightly lower because of base effects.

Analysts at ANZ noted that the core CPI annualized monthly change was 5.6% in Q1. That is far too high to be considered inflation by the Fed. We believe the FOMC will continue to hold tight on the issue until core CPI drops to 0.2%/m.

The Fed isn’t the only central bank that faces inflation pressures. The ECB’s guidance is getting more hawkish.

Fed Fund futures prices are set for rates to reach 1.75-2.0% July from current 0.75-1.0% and climb all the way up to 3% at the end of this year.

This week’s Fed speakers are plentiful, giving them ample opportunity to continue the hawkish chorus.

An aggressive rate outlook led to the U.S. dollars reaching 20-year records on a variety of majors, last week trading at 104.070.

At $1.0534, the euro was unchanged. It was just one cent above the recent low of $1.0481. The dollar however was well in control against the Japanese currency at 130.72.

Prices for oil fell slightly during early trade after the Group of Seven (G7) countries committed to Sunday’s ban on or gradual elimination of Russian imports.

Russia’s Victory Day is celebrated Monday amid fears President Vladimir Putin could declare war on Ukraine to raise reserves.

Last quoted at $111.64 was 75c lower, and $108.99 lost 78cs. [O/R]

The price of gold was $1,876 an troy ounce. It had struggled recently to find any stability as a safe place. [GOL/]