US equity futures fell and Asian stocks trimmed gains Monday as slowing economic growth and sticky inflation continued to handicap markets.

In a quiet session ahead of the US Independence Day holiday, an Asian share index climbed but was off the day’s high, S&P 500 contracts shed about 0.5% and European futures pushed higher.

Sovereign debt extended a rally triggered by a reassessment of how high central banks can hike interest rates to fight inflation given that economic expansion is wobbling. Bonds rose in New Zealand and Australia, while Treasury futures were little changed -- there’s no cash trading due to the US break.

The dollar was firm, oil fluctuated around $108 a barrel and Bitcoin retreated toward 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.

Financial markets “remain focused on the risk of a sharp slowdown in the global economy,” Carol Kong, a strategist at Commonwealth Bank of Australia, wrote in a note. She added that backdrop could bolster the dollar this week.

In China, officials are trying to repel a Covid flareup that could buffet an economically significant region. That’s another test of Beijing’s strategy of trying to eliminate the pathogen with mass testing and disruptive lockdowns.

Separately, developer Shimao Group Holdings Ltd. said it didn’t pay a $1 billion dollar note that matured Sunday, among the biggest dollar payment failures so far this year in China.

Source:
courtesy of BLOOMBERG

by Sunil Jagtiani

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