- US futures slipped on Monday, as investors faced a range of worries, including inflation and a Chinese slowdown.
- Bank of England governor Andrew Bailey said on Sunday he would have to act to stamp down on inflation.
- Elsewhere, oil kept rising and bitcoin eyed record highs, as excitement built around the first futures ETF.
US futures fell on Monday as investors fretted about inflation and data showed China’s economy slowed sharply in the third quarter.
The topic of inflation looked set to dominate trading rooms on Monday. Over the weekend, Bank of England governor Andrew Bailey said the UK’s central bank would have to act to curb inflationary pressures.
The sharp rise in energy prices “raises for central banks the fear and concern of embedded expectations,” Bailey said in an online address to the Group of 30, an economics think tank. “That’s why we, at the Bank of England have signaled, and this is another signal, that we will have to act.”
Global bond yields, which move inversely to prices, rose on Monday as investors worried about higher prices and tighter monetary policy. The yield on the 10-year US Treasury note rose 3.4 basis points to 1.61%, taking it near its highest level since June.
Adding to investors’ worries was a weaker-than-expected GDP reading out of China for the third quarter, as a property-sector slowdown and an energy crunch hit growth. The world’s second-biggest economy grew 4.9% in the third quarter year-on-year, compared to 7.9% in the second quarter.
“Although some of the recent weakness in services is now reversing, industry and construction appear on the cusp of a deeper downturn,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
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One thing that might support global stocks is the continuation of the third-quarter earnings season, with big names like Tesla, Netflix and Intel reporting this week. US stocks rallied last week after banks posted strong figures.
Yet Richard Hunter, chief market analyst at trading platform Interactive Investor, said: “The reporting season is still in its early stages and will receive greater challenges than the ones encountered so far.
“Soaring oil prices are reigniting inflation concerns, consumer sentiment is fragile and the well-reported supply chain disruptions could all take some of the sheen from the strong lead provided by the banks.”
Energy prices showed little sign of cooling on Monday, with oil resuming its march higher. Brent crude was up 0.92% to $US85.64 ($AU115) a barrel while WTI crude was 1.25% higher at $US82.75 ($AU112) a barrel, its highest since 2014.
Bitcoin was up 3.8% to $US61,637 ($AU83,097). A bitcoin futures ETF could see many more retail traders and institutional investors enter the space and could help the token rise past its previous record high of more than $US64,000 ($AU86,283), analysts said.