• Global shares fell, as investors mulled over hawkish central bank comments last week, as inflation has soared.
  • Asian stocks slipped as rising COVID cases in China led to further lockdowns in the country, denting oil.
  • Surging inflation in Europe and the US has seen central banks step up plans to tighten monetary policy.

Global stocks sank Monday, as investors poured over increasingly hawkish comments by central banks to tame rising inflation, while a surge in cases of COVID in China resulted in more lockdowns, raising doubt about the resilience of the world's second-biggest economy. 

European stocks mostly fell, under pressure from declines in the technology and utility sectors, leaving the European Stoxx 600 down 0.4% on the day. Investors are also awaiting the European Central Bank's next monetary policy meeting later this week for insight into the likely path for eurozone interest rates.

French markets were among the better performing in the region, after this weekend's first round of voting in the country's presidential election, where incumbent Emmanuel Macron is facing off against far-right candidate Marine Le Pen. Paris' CAC 40 rose 0.4%, compared with a drop of 0.6% in Frankfurt's DAX and a 0.3% fall in the FTSE 100.

"Looking forward now, it's an eventful calendar for markets this week ahead of Easter, with Thursday's ECB meeting set to be one of the main highlights," Deutsche Bank said Monday.

US futures eased, with those on the Dow Jones falling 0.32%, S&P 500 futures dropping 0.60%, and Nasdaq futures dropping 1.03%. The benchmark indices slid last week, after a slew of Federal Reserve officials stepped up their anti-inflation rhetoric, raising the chances that the central bank will act more aggressively to tackle rising prices.

US consumer inflation data for March due on Tuesday could cement those expectations further. The consumer price index is forecast to have risen by another 8% last month, keeping inflation at its highest since the early 1980s and raising the odds of a 50-basis point rate hike from the Fed in May. The Fed has not raised interest rates by more than 25bps at a single meeting since 2000.

The sell-off in government bonds continued, as expectations grew for the Fed to act more quickly to deal with consumer inflation. The yield on the 10-year US Treasury was last up 4 basis points at 2.75%, its highest for three years.

In Asia, stocks dropped as China's COVID outbreak worsened. Japan's Nikkei 225 slid 0.61%, while China's Shanghai Composite Index tumbled 2.61% and Hong Kong's Hang Seng Index plummeted 3.03%.

The increase in COVID cases in China prompted tight lockdowns and other restrictions on activity in the country, while a sharp rise in producer and consumer inflation added to the concern about the potential impact to the economy.

"Those inflation numbers come amidst continued Covid outbreaks in China, with state media CCTV reporting yesterday that the southern city of Guangzhou would suspend in-person classes for schools from today due to the virus," Deutsche Bank said.

Oil fell as tighter restrictions in the world's largest importer of crude could translate into a weaker demand. Brent crude oil dropped 2.28% to $100.44 a barrel while WTI crude oil dived 2.47% to $95.86 per barrel.  

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