U.S. futures fall, stocks gain as bonds advance: Markets fold

(Bloomberg) — U.S. stock futures fell and Asian shares pared gains on Monday as slowing economic growth and flat inflation continued to weigh on markets.

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Japanese shares added 1%, but China and Hong Kong were on the back foot. The S&P 500 and Nasdaq 100 fell more than 0.5%. US stock and bond markets will be closed on Monday for Independence Day.

Bonds in Australia and New Zealand rose, extending the government debt rally. Investors are reassessing how senior central banks can raise interest rates to fight inflation as the economic expansion falters. Bond futures rose — no cash trading due to US holidays.

The yen and the Swiss franc moved higher. Crude oil fell to $108 a barrel. Bitcoin hovered just above 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 concerned about the recession and its effects rather than focusing solely on increased price pressures.

Market sentiment is “shifting radically away from inflation concerns to one now where we are firmly focused on growth,” Chris Weston, head of research at Pepperstone Group, wrote in a note. One of the fears now is that the Fed will be too slow on rate hikes, he said.

In China, Covid cases continued to rise over the weekend, another test of its strategy of trying to eradicate the pathogen with mass testing and lockdowns.

Separately, Chinese developer Shimao Group Holdings Ltd. said it defaulted on a $1 billion note due on Sunday, adding to a record year of offshore bond defaults in the industry.

What to watch this week:

  • Australia interest rate decision, Tuesday

  • PMIs for Eurozone, China, India among others, Tuesday

  • US factory orders, durable goods, Tuesday

  • FOMC Minutes, US PMI, ISM Services, JOLTS Jobs, Wednesday

  • BEI crude oil inventory report, Thursday

  • Fed Governor Christopher Waller, the president of the St. Louis, James Bullard, was scheduled to speak Thursday

  • ECB account of its June policy meeting, Thursday

  • US employment report for June, Friday

Some of the main movements in the markets:

inventories

  • S&P 500 futures were down 0.6% at 11:03 am. in Tokyo. The S&P 500 rose 1.1% on Friday

  • Nasdaq 100 futures fell 0.6%. The Nasdaq 100 rose 0.7% on Friday

  • Japan’s Topix rose 1.1%

  • Australia’s S&P/ASX 200 rose 1.4%

  • South Korea’s Kospi fell 0.2%

  • Hong Kong’s Hang Seng lost 0.7%

  • China’s Shanghai Composite fell 0.1%

  • Euro Stoxx 50 futures rose 0.6%

currency

  • The Bloomberg Dollar Spot index was flat

  • The euro was at $1.0434, up 0.2%

  • The Japanese yen was at 135.08 per dollar, up 0.1%

  • The offshore yuan was at 6.6987 per dollar

Bindings

Goods

  • West Texas Intermediate crude was down 0.4% at $108.02 a barrel

  • Gold was at $1,808.61 an ounce, down 0.2%

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