In This Article:
* Dollar hits new 20-year high, yen at two-decade low
* Monday looks to be another tough day for stocks
* Focus on Wednesday's U.S. CPI data
* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, May 9 (Reuters) - Stocks fell again on Monday and the dollar rocketed to a new two-decade high as worries about higher interest rates and a tightened lockdown in Shanghai deepened investors' fears that the global economy is headed for a slowdown.
After a bruising session on Friday in which U.S. stocks sold off sharply as another rise in long-dated U.S. Treasury yields unnerved investors, markets were set for a rocky start to the week, with most indexes in the red.
Central banks in the United States, Britain and Australia all raised interest rates last week, and investors are bracing for more tightening as policymakers try to get on top of soaring inflation.
There was plenty more for investors to worry about on Monday aside from tightening financial conditions.
No let-up appeared in China's zero-COVID policy, with Shanghai tightening the city-wide lockdown for 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.
Despite the sharp rise in rates, not all investors think a slowdown is imminent.
"We continue to believe investors should position for the reality of inflation now, rather than the chance of a recession soon," said UBS Global Wealth Management strategists.
Wall Street headed for another weaker open with the S&P 500 stock futures down 1%, while Nasdaq futures shed 0.9%. U.S. 10-year bond yields reached a new 3-1/2 year high of 3.179%.
The Euro STOXX weakened 0.56%, while Germany's DAX lost 0.21%.
MSCI's main emerging market stocks index fell to its lowest level since July 2020.
The MSCI World Index fell 0.5%, leaving it not far from the 17-month intraday low reached on Friday.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.27% and Japan's Nikkei 2.53%. Chinese blue chips eased 0.8%, while in offshore markets the yuan fell to 6.765 per dollar, another 18-month low.
Investors are also tense ahead of the U.S. consumer price report due on Wednesday. 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 prices are actually seen rising by 0.4% in April, the monthly rate accelerating from 0.3% in the previous month, even as the annual pace dips a bit due to base effects.