Stock markets around the world have been selling off to start the new trading week. Asia Pacific trading saw the Hang Seng lose 2.7% and Shanghai drop 1.2%. In Europe this morning, the Dax is down 1.0% while the FTSE is down 0.4%. US index futures are down 0.5%-0.9% coming off of a flat Friday.
Last week’s strong US nonfarm payrolls report ended up not providing markets with any boost and today’s action suggests that investors primary concern continues to be the impact of high inflation and tightening monetary policy. Over the weekend, China released inflation numbers that showed consumer prices climbing more than expected (2.5% vs street 2.4% and previous 2.1%), and producer prices levelling off but not falling as much as hoped (6.1% vs street 6.0% and previous 6.4%). US consumer and producer prices are due Wednesday and Thursday of this week. The Bank of Canada is announcing its latest interest rate decision on Wednesday morning with a 0.75% hike widely expected. On Friday, focus turns to GDP and retail sales numbers for China plus the US retail sales report.
Investors also appear to be biting their nails ahead of this week’s kickoff to US earnings season which starts with Pepsico tomorrow and picks up on Thursday and Friday with several big banks reporting results. Twitter falling 5.0% premarket after Elon Musk withdrew his takeover bid over the weekend hasn’t been helping sentiment either.
With the US 10-year treasury yield holding above 3.0% and capital apparently still exiting risk markets for defensive positions, the US Dollar is steamrolling everything in its path again today. The Euro is down 0.8% and testing par today while Pound is down 0.7% and gold plus the Canadian Dollar are down 0.5%. Commodities are also getting hammered again this morning. WTI crude oil is down 2.4% but still holding $100.00/bbl, while copper is down 1.5%. Natural gas is up 5.0% with Russian gas pipelines down for planned summer maintenance but when and how much supply may eventually return remaining an open question.