Markets swung Monday as traders fretd about a possible recession caused by central bank interest rate hikes aimed at fighting soaring inflation.
The data showing a flare-up of fresh Covid 19 cases in China revived concerns about the government's policy of locking down towns and cities to fight the disease despite the economic cost.
After the S&P 500's worst January-June since 1970, Wall Street got the second half off to a healthy start Friday as a below-forecast reading on US manufacturing provided that banks won't go on an extended period of monetary tightening.
It followed a drop in confidence among consumers, a key driver of the world's top economy.
Rodrigo Catril, National Australia Bank's Rodrigo Catril said the Federal Reserve and other financial chiefs might not relax back on their rate hikes too soon, as inflation remains stuck around multi-decade highs.
While the data indicates a US economic slowdown is coming, we are not seeing signs of an ease in inflationary pressures, an important distinction given that the Fed will continue with its aggressive tightening approach until it sees evidence of the latter, he said in a commentary.
The European Central Bank is due to lift rates for the first time in more than a decade.
While surging prices remain a major problem, Chris Weston, a Pepperstone Group spokesman, said that psychology is shifting from inflation concerns to one where investors return from a long weekend to play catch-up with Friday's losses, while Seoul, Taipei, Bangok and Jakarta were also down.
A rise in new Covid cases in China over the weekend weighed on sentiment among investors who fear a return to the painful lockdowns in major cities including Shanghai, which has hammered the world's number two economy.
The country saw more than 700 new infections Saturday and Sunday, having held below 50 a day for the previous two weeks.
Macau saw its first two deaths from Covid over the weekend, and authorities said they would consider a city-wide lockdown to fight the disease. The comments sent Hong Kong-listed shares plunging in Macau casinos.
Oil prices wobbled with concerns about the recession weighing on sentiment as traders bet on a drop in demand, while the head of Asia at Vitol said he saw signs consumers were beginning to feel the pressure of high commodity costs.
There is very clear evidence that there is economic stress being caused by high prices, which some people refer to as demand destruction, said Mike Muller. It is not just oil, but also liquefied natural gas Dollar yen: UP at 135.37 yen from 135.28 yen Friday.
The euro pound is DOWN at 86.03 pence from 86.21 pence.
West Texas Intermediate: DOWN 0.1 percent at $108.36 per barrel.
Brent North Sea crude is DOWN 0.1 percent at $111.51 per barrel.
New York - Dow was up 1.1 percent at 31,097.