Asian stocks on Monday were mainly down as investors awaited U.S. inflation data that might compel another massive rise in interest rates, as well as the start of an earnings season that could put profits under pressure.

The BSE Sensex in India fell over 200 points on Monday, echoing a bearish trend in global stock markets. In early trading, the Sensex slipped 219.48 points or 0.40% to 54,262.36. The NSE Nifty dropped 69.85 points or 0.43% to 16,150.75.

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The market is already betting strongly on the Federal Reserve raising interest rates by 75 basis points in response to positive June payrolls data, pushing bond yields and the dollar upward.

To emphasise the global scope of the inflation threat, Canadian and New Zealand central banks are set to tighten even more this week.

Though Wall Street made modest gains last week, the market sentiment will be challenged by JPMorgan and Morgan Stanley results on Thursday, followed by Citigroup and Wells Fargo the next day.

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The S&P 500 futures were down 0.4% on Monday, while the Nasdaq futures were down 0.5%. The EURO STOXX 50 futures declined 0.6%, while the FTSE futures lost 0.7%.

After Shanghai uncovered a COVID-19 case with a new subvariant, Omicron BA.5.2.1, Chinese blue chips fell 1.2%.

MSCI’s broadest Asia-Pacific equity index outside Japan fell 0.7%. South Korea rose 0.1%, while Japan’s Nikkei gained 1.6%.

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The U.S. consumer price data on Wednesday will be a crucial challenge, with markets expecting headline inflation to accelerate further to 8.8% but a slight dip in the core measure to 5.8%.

Treasury yields rose roughly 10 basis points in response to the jobs report, with the 10-year yield standing at 3.09% on Monday, up from a recent low of 2.746%.

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The combination of a hawkish Fed and recession worries, particularly in Europe, has held the dollar near 20-year highs against a basket of rivals. The dollar surpassed 137.00 yen, reaching its highest level since 1998, as the Bank of Japan maintained its dovish stance.

The euro remained under pressure at $1.0140, having fallen 2.4% last week to a two-decade low and a major retracement target of $1.0072.

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Non-yielding gold, which has dropped for four weeks in a row, was trading at $1,740 an ounce due to soaring interest rates and a strong dollar.

Last week, oil prices fell nearly 4% as concerns about demand outweighed supply restrictions.

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China’s data, coming on Friday, are expected to reveal that the world’s second-largest economy dropped considerably in the second quarter owing to coronavirus lockdowns.

Brent crude was 72 cents down at $106.30 per barrel on Monday, while US crude was 89 cents lower at $103.90 per barrel.