(Bloomberg) — U.S. equity futures retreated and stocks looked set for a choppy start Monday amid worries about high inflation and as investors await Chinese trade data that may show the economic toll of Covid lockdowns.
Contracts fell for Japan and Australia, while Hong Kong is shut for a holiday. Shares and bonds are coming off their fifth straight weekly drop, hampered by sharply tighter monetary policy and signs of a stagflation-like backdrop.
Commodity-market disruption stemming from Russia’s war in Ukraine continues to sustain price pressures. In the latest developments, the Group of Seven most-industrialized countries pledged to ban the import of Russian oil.
The European Union is working on a similar plan but Hungary remains a holdout and the bloc’s talks are set to continue. Oil fluctuated near $110 per barrel.
Treasury yields, meanwhile, are in sight of levels last seen in 2018 and inflation data this week from the U.S. and elsewhere could drive bond-market swings. The dollar gained versus key peers in early trading in a sign of investor wariness.
Growth, inflation and war risks are providing investors will little respite. Later Monday, President Vladimir Putin is due to speak at Russia’s May 9 Victory Day parade, which marks the anniversary of Nazi Germany’s surrender in 1945. He may indicate his next steps for the Ukraine invasion.
The short-term outlook for the stock market “is still messy and there may be more downside as markets worry about a significant economic slowdown or ‘hard landing’ and aggressive interest-rate hikes,” Diana Mousina, senior economist at AMP Investments, wrote in a note.
The upcoming Chinese data may show that export growth slowed to its weakest pace since June 2020, while imports probably contracted for a second month. Premier Li Keqiang warned of a “complicated and grave” employment situation as Beijing and Shanghai tightened Covid curbs.
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