(Bloomberg) -- US equity futures retreated and Asian stocks trimmed gains Monday as slowing economic growth and sticky inflation continued to cast a shadow across markets.
Japanese shares added 1% but China and Hong Kong were on the back foot. S&P 500 and Nasdaq 100 contracts shed more than 0.5%. US stock and bond markets will be closed Monday for the Independence Day break.
Bonds in Australia and New Zealand climbed, extending a rally in sovereign debt. Investors are reassessing how high central banks can hike interest rates to fight inflation given that economic expansion is wobbling. Treasury futures edged up -- there’s no cash Treasuries trading due to the US holiday.
The yen and Swiss franc pushed higher. Crude oil slid toward $108 a barrel. Bitcoin hovered just above the $19,000 level.
In the US and elsewhere, signs of economic weakness are becoming more apparent in everything from personal spending to manufacturing. Investors are increasingly fretting about recession and its implications rather than focusing exclusively on elevated price pressures.
The psychology of the market is “shifting radically from inflation concerns to one now where we’re firmly focused on growth,” Chris Weston, head of research at Pepperstone Group, wrote in a note. One of the fears now is that the Fed will be too slow in dialing back on rate increases, he said.
In China, Covid cases continued to rise over the weekend, another test for its strategy of trying to eliminate the pathogen with mass testing and lockdowns.
Separately, Chinese developer Shimao Group Holdings Ltd. said it didn’t pay a $1 billion dollar note that matured Sunday, adding to a record year of offshore-bond delinquencies in the sector.
What to watch this week:
- Australia rate decision, Tuesday
- PMIs for euro area, China, India among others, Tuesday
- US factory orders, durable goods, Tuesday
- FOMC minutes, US PMIs, ISM services, JOLTS job openings, Wednesday
- EIA crude oil inventory report, Thursday
- Fed Governor Christopher Waller, St. Louis Fed President James Bullard, scheduled to speak, Thursday
- ECB account of its June policy meeting, Thursday
- US employment report for June, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.6% as of 11:03 a.m. in Tokyo. The S&P 500 rose 1.1% Friday
- Nasdaq 100 futures fell 0.6%. The Nasdaq 100 rose 0.7% Friday
- Japan’s Topix index rose 1.1%
- Australia’s S&P/ASX 200 index increased 1.4%
- South Korea’s Kospi index shed 0.2%
- Hong Kong’s Hang Seng index lost 0.7%
- China’s Shanghai Composite index fell 0.1%
- Euro Stoxx 50 futures rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index was steady
- The euro was at $1.0434, up 0.2%
- The Japanese yen was at 135.08 per dollar, up 0.1%
- The offshore yuan was at 6.6987 per dollar
Bonds
- The yield on 10-year Treasuries declined 13 basis points to 2.88% Friday
- Australia’s 10-year yield declined about 10 basis points to 3.50%
Commodities
- West Texas Intermediate crude fell 0.4% to $108.02 a barrel
- Gold was at $1,808.61 an ounce, down 0.2%