US futures are down with corporate earnings season kicking off this week amid rising anxiety over how companies are navigating soaring inflation, and news about the spread of a new coronavirus variant.
Also this week, the US will release fresh data about rising costs for both companies and families with inflation hovering near four-decade highs.
Futures for the Dow Jones industrials fell 0.6 per cent and futures for the S&P 500 slid 0.7 per cent before Monday’s opening bell.
Shares are sinking in Europe at midday after most Asian markets also fell, with the exception of Japan’s benchmark, which rallied after the ruling Liberal Democratic Party garnered a landslide parliamentary election victory.
The euro sagged closer to parity against the US dollar, dipping nearly 1 per cent to $1.0091. Europe’s shared currency is at its lowest level in 20 years against the US dollar, hit by worries over the possible recession and the surge in the greenback as the Federal Reserve raises interest rates to combat inflation.
The US dollar rose to 137.15 Japanese yen from 136.10 yen.
Germany’s DAX fell 1 per cent as the shut-down of a major gas pipeline from Russia to Germany for annual maintenance brought concern Russia might not resume the flow of gas as scheduled.
In Paris, the CAC 40 declined 0.8 per cent, while Britain’s FTSE 100 lost 0.4 per cent.
Wall Street had a sputtering finish last week, as global markets eyed Chinese economic indicators and manoeuvres by central banks, including the US Federal Reserve, to contain stubborn inflation.
On Friday, the S&P 500 dropped 0.1 per cent and the Dow also fell 0.1 per cent, while the Nasdaq rose 0.1%. The Russell 2000 index of small-company stocks slipped less than 0.1 per cent.
“A recession is not the market’s base outlook, but until proven otherwise, investors will debate the depth of the growth hit, not the likelihood of recession; thus, good economic data is good news for stocks,” Stephen Innes of SPI Asset Management said in a commentary.
China reports its April-June growth data on Friday, and an update on US inflation is due Wednesday. Investors also are watching for upcoming corporate earnings reports, which will give investors insight into how inflation is impacting businesses and consumers. Banks, airlines and health care companies start reporting midweek.
COVID-19 infections are also surging in some areas. The Asian gambling centre of Macao will close all its casinos for a week starting Monday and largely restrict people to their homes as it tries to stop a COVID-19 outbreak that has infected more than 1,400 people in the past three weeks.
The quickly changing coronavirus has spawned yet another super contagious omicron mutant that’s worrying scientists as it gains ground in India and pops up in numerous other countries, including the United States, Australia, Germany, the United Kingdom and Canada.
Scientists say the variant – called BA.2.75 – may be able to spread rapidly and get around immunity from vaccines and previous infections.
This week, major airlines, banks and health companies will post quarterly earnings and the US will post data on consumer and producer prices.
Asian shares were mostly lower on Monday, though Japan’s benchmark Nikkei jumped 1.1 per cent to 26,812.30.
Japan’s governing party and its coalition partner scored a major victory in balloting Sunday, which came two days after the assassination of former Prime Minister Shinzo Abe. Abe was shot by a man emerging from the crowd listening to his campaign speech, who took out a homemade gun and fired.
The attack shocked a nation that rarely sees gun violence. The Liberal Democratic Party was bound for victory even before the assassination, but some analysts said the shock of Abe’s death was likely to strengthen that trend.
Australia’s S&P/ASX 200 declined 1.1 per cent to 6,602.20. South Korea’s Kospi lost 0.4 per cent to 2,340.27.
Hong Kong’s Hang Seng slipped 2.8 per cent to 21,124.20, while the Shanghai Composite fell 1.3 per cent to 3,313.58.
Technology shares fell after market regulators in China fined companies for not reporting past transactions as required. E-commerce giant Alibaba tumbled 6.8% while Tencent Holdings lost 3.2 per cent.
Shares in Twitter tumbled nearly 6 per cent before the opening Monday after Elon Musk announced late Friday that he will abandon his $44 billion offer to buy the social media company because he said it failed to provide enough information about the number of fake accounts. Twitter said it would sue the Tesla CEO to uphold the deal, and a titanic legal battle likely lies ahead.
In energy trading, US benchmark crude lost $2.37 to $102.42 a barrel. It gained $2.06 to $104.79 a barrel on Friday.
Brent crude, the international standard, fell $1.78 to $105.24 a barrel.
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