US futures dipped with European stocks as the highest oil prices since 2014 stirred fears that a spreading energy crunch will derail the global pandemic recovery.
West Texas Intermediate crude rose past $80 a barrel and China’s coal futures reached a record as flooding shuttered mines. European equities were modestly lower, with declines led by travel and property firms. US contracts also slipped, with contracts on the Nasdaq 100 underperforming those on the S&P 500.
Fuel shortages in China and Europe bolster the case that higher inflation will persist beyond the expectations of central bankers, pushing them toward faster rate increases to redress price pressures. Friday’s US payrolls report showed jobs growth below estimates even as rising wages were seen stoking inflation.
“We see rising risks to global growth and evidence of more persistent inflation, which makes us more cautious on the outlook for global markets overall,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, wrote in a note to clients.
Upcoming reports on third-quarter company profits are seen as the next potential pressure point in a market already under siege from slowing global growth, sticky inflation and tighter monetary policies.
Global earnings revisions are sliding — an omen for US stocks that have taken their cue from rising earnings estimates all year.
“If that earnings picture starts to fade, then I think that does take away one important element,” Morgan Stanley cross-asset strategist Andrew Sheets said in an interview with Bloomberg TV on Friday. “Companies are also getting squeezed in an unusual way — from the energy side, from the commodity price side, from a labour side.”
Meanwhile, Treasury futures fell after the 10-year US Treasury yield advanced past 1.6% Friday. There’s no cash Treasuries trading Monday due to a US holiday. The dollar was steady.
Elsewhere, a gauge of Chinese tech equities jumped about 3% on easing concerns about Beijing’s crackdown on internet platforms, after food delivery giant Meituan received a lower-than-expected antitrust fine.
In cryptocurrencies, Bitcoin climbed past $56 000.
Here are a few events to watch this week:
- IMF/World Bank annual meetings start in Washington. Though October 17
- Bank of Korea policy decision and briefing. Tuesday
- Atlanta Fed President Raphael Bostic speaks on inflation. Tuesday
- U.S. FOMC minutes and CPI. Wednesday
- JPMorgan Chase & Co. kicks off the reporting season. Wednesday
- China PPI, CPI. Thursday
- US initial jobless claims, PPI. Thursday