U.S. Futures Decline as Stagflation Worries Deepen: Markets Wrap

(Bloomberg) — U.S. equity-index futures declined as concerns about slowing growth and persistently high inflation kept investors on the edge.

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Contracts on the S&P 500 Index fell 0.3% after the underlying gauge posted the biggest weekly loss since February. Iron ore to aluminum rallied as a global supply crunch turned commodities into a sellers’ market. West Texas Intermediate fluctuated around $76 per barrel before an OPEC+ meeting to discuss production policy.

Global markets have taken a risk-off turn as the post-pandemic recovery stalls on supply shortages in everything from semiconductors to coffee. A spreading energy crunch has added to concern elevated inflation will be longer-lasting than policy makers predict. Risks are multiplying at a time investors are bracing for Federal Reserve tapering as early as next month.

“The global chip and energy shortage is getting worse, the inflation is rising, the recovery may be slowing, and that puts central banks between a rock and a hard place,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “The best they could do is to do nothing, or to tighten their monetary policy to avoid losing control on the economy.”

Oil futures were mixed on Monday amid waning expectations that OPEC+ members will consider boosting output more than planned. Treasury yields edged higher, with the 10-year rate adding three basis points. The dollar was steady, after two days of losses.

In Europe, gains for health-care stocks offset lossses in banks and carmakers on the benchmark Stoxx 600 gauge. Wm Morrison Supermarkets Plc declined 3.8% after CD&R emerged as the highest bidder for the British grocer, though analysts said the offer terms resulting from the auction process were disappointing.

Story continues

Japanese and Hong Kong shares dropped after trading in the shares of the debt-ridden China Evergrande Group were suspended in Hong Kong, along with those of its property management arm, amid reports of a unit stake sale. Mainland Chinese markets are closed through Thursday for the Golden Week holidays.

For more market analysis, read our MLIV blog.

Here are some events to watch this week:

• OPEC+ meets virtually Monday to review output policy amid a global energy crunch.

• Reserve Bank of Australia policy decision Tuesday

• Rate decision in New Zealand on Wednesday

• Reserve Bank of India monetary policy decision on Friday

• The U.S. Labor Department releases unemployment and job creation data Friday

• Annual Nobel announcements start on Monday, with the Peace Prize being awarded on Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 10:18 a.m. London time

• Futures on the S&P 500 fell 0.3%

• Futures on the Nasdaq 100 fell 0.4%

• Futures on the Dow Jones Industrial Average fell 0.2%

• The MSCI Asia Pacific Index fell 0.5%

• The MSCI Emerging Markets Index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.2% to $1.1617

• The Japanese yen fell 0.1% to 111.21 per dollar

• The offshore yuan fell 0.2% to 6.4473 per dollar

• The British pound rose 0.2% to $1.3570

Bonds

• The yield on 10-year Treasuries advanced three basis points to 1.49%

• Germany’s 10-year yield advanced two basis points to -0.21%

• Britain’s 10-year yield advanced three basis points to 1.03%

Commodities

• Brent crude was little changed

• Spot gold fell 0.6% to $1,751.09 an ounce

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