Asian markets face cautious start on virus fears

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Asian markets face cautious start on virus fears

On Monday, investors in Asia look set for a cautious start due to concerns about the possibility of more growth-sapping Covid curbs in China that could affect the global outlook.

After Macau announced the closure of almost all business on Monday due to a virus outbreak, the futures increased for Japan and Australia but were little changed for Hong Kong, where casino shares face a challenging open.

US equity contracts fell after a weekly gain for global equities. The dollar was mixed against major peers in early trading, while crude oil fell.

Financial hub Shanghai reported its first case of the highly infectious BA. There are 5 omicron subvariants warning of very high risks, which has caused fears of more lockdowns given that China is still wedded to stamping out the virus. Beijing has pledged to shore up the economy.

High inflation and slow economic expansion are a problem with the shadow markets. A solid US employment report Friday eased some recession fears and tightened expectations of more Federal Reserve monetary tightening.

The US 10 year yield was above 3% in the last two years, but fell in Treasuries. There are inversions along the yield curve that could indicate economic retrenchment ahead.

An inflation reading due from the US later this week is expected to get closer to 9%, a new four-decade high, buttresses the case for a jumbo July rate hike. Earnings reports from companies will shed light on the recession fears that contributed to an $18 trillion first-half wipeout in global equities.

The consumer-price index data will be the main driver of risk this week, and a 9% print is possible, which should keep US bond yields going higher, Chris Weston, head of research at Pepperstone Group, wrote in a note.

The race to replace Boris Johnson was steady as the pound went up as the UK premier heats up. The ruling coalition boosted its majority in an upper house election held Sunday, two days after the assassination of former Prime Minister Shinzo Abe.

The main channel for Russian gas to Europe goes down in Europe for 10 day maintenance on Monday. Germany and its allies are bracing for President Vladimir Putin to use the opportunity to cut off flows for good in retaliation for the West s support of Ukraine after Russia's invasion.

President Joe Biden said there were talks on possible action on US tariffs on Chinese imports. His administration is considering easing some Trump-era levies on consumer goods. Biden and his Chinese counterpart Xi Jinping are expected to speak again in the coming weeks.

Some of the biggest moves in markets are:

The offshore yuan was 6.6879 per dollar.

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