In This Article:
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* S&P 500 futures fall early, Nikkei loses 1.2%
* Growth fears as Beijing sticks with zero-COVID policy
* U.S. CPI looms, market priced for rapid Fed hikes
* G7 vows to phase out Russian oil, crude slips
By Wayne Cole
SYDNEY, May 9 (Reuters) - Asian markets got off to a shaky start on Monday as U.S. stock futures took an early skid on rate worries, while a tightening lockdown in Shanghai stoked concerns about global economic growth and possible recession.
"A series of rate hikes and hawkish communication came against a backdrop of plummeting Chinese and European activity, new plans for Russian energy bans and continued supply-side pressures," warned analysts at Barclays.
"This creates the gloomy prospect of persistent inflation forcing central banks to hike rates despite sharply slowing growth."
There was no let up in China's zero-COVID policy with Shanghai tightening the city-wide COVID lockdown of 25 million residents.
Speculation that Russian President Vladimir Putin might declare war on Ukraine in order to call up reserves during his speech at "Victory Day" celebrations also hurt market sentiment. Putin has so far characterised Russia's actions in Ukraine as a "special military operation", not a war.
S&P 500 stock futures led the way with a drop of 1.0%, while Nasdaq futures shed 0.9%. U.S. 10-year bond yields edged up to a fresh top at 3.15%.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%, and Japan's Nikkei 1.2%.
Investors were also tense ahead of the U.S. consumer price report due on Wednesday where only a slight easing in inflation is forecast, and certainly nothing to prevent the Federal Reserve from hiking by at least 50 basis points in June. Core inflation is actually seen rising by 0.4% in April, up from 0.3% the previous month, even as the annual pace dips a bit due to base effects.
"In Q1, the annualised monthly change in core CPI was 5.6%," noted analysts at ANZ. "That is too high for the Fed and we think the FOMC won't be relaxed about inflation until the core number moderates to around 0.2% m/m on a sustained basis.
"The Fed is not the only central bank facing inflation pressures. Increasingly, the guidance from the ECB is becoming a lot more hawkish."
DOLLAR IN DEMAND
Fed fund futures are priced for rates reaching 1.75-2.0% in July, from the current 0.75-1.0%, and climbing all the way to around 3% by the end of the year.
The diary is full of Fed speakers this week, which will give them plenty of opportunity to keep up the hawkish chorus.