EQUITIES

Shares in the Asia-Pacific traded higher on Monday as investors assess inflation and recession fears. European stocks also are expected to open higher later today, continuing a positive trend.

Hong Kong’s Hang Seng index led gains in the region, rising more than 2%. Mainland Chinese markets also gained, as the Shanghai Composite climbed 0.88%.

Japan's Nikkei 225 rallied 1.43%, while Australia's benchmark S&P/ASX 200 jumped 1.94%. The KOSPI in South Korea gained 1.49%, and the FTSE Straits Times Index in Singapore was 0.53% higher.

FTSE futures and EUROSTOXX 50 futures both rose 0.45% ahead of the start of European market trading.

OIL

Crude oil continues to trade in volatile trading on Monday as the market grapples with concerns that a global economic slowdown could depress demand versus worries about lost Russian supply amid sanctions over the Ukraine conflict.

U.S. crude was up 0.49% at $107.66 per barrel, while international benchmark Brent crude inched down 3.22% to $109.60 per barrel.

The prospect of more supply tightness loomed over the market as western governments sought ways to cut Russia's ability to fund its war in Ukraine, even though G7 leaders were also expected to discuss a revival of the Iran nuclear deal, which might lead to more Iranian oil exports.

Producer nations in OPEC+, which includes Russia, meanwhile will meet on Thursday, where the group will likely stick to a plan for accelerated oil output increases in August.

Both contracts posted their second weekly decline last week.

CURRENCIES

The U.S. dollar index was steady at 103.954, continuing to consolidate near the lowest since the middle of the month against major peers after reaching a 20-year peak of 105.79 earlier in the month.

U.S. long-term Treasury yields hovered at around 3.153% after bouncing off a two-week low just above 3% at the end of last week as traders removed bets for hikes next year, but still pondered if aggressive tightening this year could trigger a recession.

Russia defaulted on foreign-currency sovereign debt for the first time in more than 100 years after sources said bondholders in Taiwan had not received payments after a grace period expired on Sunday evening. The country’s central bank foreign reserves remain frozen.

Bitcoin was flat, trading at $21,340 after falling as low as $17,588.88 earlier this month.

GOLD

Gold prices gained on Monday, as news of some Western nations planning to officially ban imports of the metal from Russia sparked some interest in bullion.

Britain, the United States, Japan, and Canada will ban new imports of Russian gold as part of efforts to tighten the sanctions squeeze on Moscow for its invasion of Ukraine. The ban will come into force shortly and apply to newly mined or refined gold, thoughthe move will not affect previously exported Russian-origin gold, the report added.

Spot gold rose 0.74% to $1,840.00 per ounce. U.S. gold futures were up 0.56% at $1,840.60.

Spot silver rose 1.2% to $21.36 per ounce, platinum gained 0.5% to $912.00, and palladium climbed 0.6% to $1,886.65.

ECONOMIC OUTLOOK

Shares rose broadly on Monday, as expectations of less hawkish moves from the U.S. Federal Reserve slightly eased fears of a global economic recession.  

Weakening U.S. economic data on Friday knocked it off that perch, as a consumer confidence showed at a record low, giving another prompt for investors to dial back expectations of a 75-bps rise in interest rates at the next Fed meeting.

The Fed has made clear the meeting will see a debate between raising interest rates by 50bps or 75bps. Fears of it going for the larger move have pushed asset prices lower.

Later on Monday, investors will be looking for more updates from the summit of the Group of Seven leaders. U.S. President Joe Biden joined the leaders of the world’s wealthiest democracies, including Canada, the U.K., Germany, France, Italy and Japan, for the three-day summit beginning Sunday at which Ukraine and the global economy are topping the agenda.

Global releases of PMI also on investors’ watch later in the week. The factory activity data due could provide a guide as to whether the economy is finding momentum again after the disruption caused by strict COVID-19 lockdown measures.