SAY GOODBYE TO RATE CUTS
For Europe, EUROSTOXX 50 futures and DAX futures both slid 1.2 per cent. On Wall Street, S&P 500 futures dipped 0.1 per cent while Nasdaq futures lost 0.2 per cent.
The inflationary pulse from energy has seen markets abandon hopes for further monetary easing globally and swing to pricing in rate hikes across most developed nations.
Futures have wiped out expectations for 50 basis points of easing from the Federal Reserve this year, with even a small chance the next move could be up.
The hawkish sea change has hammered bonds and sent yields climbing, adding to borrowing costs for many governments already struggling with deficits and debt.
The prospect of higher costs and softer consumer demand has clouded the outlook for corporate profits, while the jump in yields made equity valuations look ever more stretched.
The energy shock, combined with pressure on fiscal budgets from higher defence spending, saw double-digit increases in bond yields globally last week.
Ten-year U.S. Treasury yields were at an eight-month top of 4.4110 per cent, having climbed a steep 44 basis points since the war began.
The heightened volatility in markets has tended to benefit the US dollar as a store of liquidity. The US is also a net energy exporter, giving it a relative advantage over Europe and much of Asia, which are net importers.
The euro was a shade lower at US$1.1555, but some way from major supports at US$1.1409 and US$1.1392.
The dollar was flat versus the yen at 159.15, just off a 20-month top of 159.88, with investors wary in case a break of 160.00 triggers intervention from Japan.
In commodity markets, gold was 0.4 per cent firmer at US$4,511 an ounce, having lost ground last week as investors wager on higher interest rates globally.
