Stagflation fears stalk shares

Stagflation jitters stunted growth in global shares on Monday, while bets that major central banks will tighten monetary policy pushed up bond yields and lifted the dollar to a near three-year peak against the Japanese yen.

Brent oil prices extended their bull run to reach ground last visited in late 2018, with gains across the energy complex stoking inflation concerns.

“Higher energy prices, shortages will inevitably make their way through global value chains in the form of rising prices and potentially shortages of industrial and consumer goods,” OANDA analyst Jeffrey Halley said.

“All of this makes the constant blathering from central bankers around the world about inflation being ‘transitory’ ring more and more hollow.”

In Europe, surging commodity prices supported oil and mining shares, but fears persisted about stagflation, an environment of economic stagnation and rising prices. The euro STOXX 50 traded 0.3 per cent lower.

Nasdaq futures and S&P 500 futures were down around 0.6 per cent and 0.3 per cent respectively.

The MSCI world equity index, which tracks shares in 50 countries, was 0.1 per cent higher. Sentiment in China was partly helped by some cities’ planned supportive measures for the beleaguered property market.

China’s blue-chip CSI300 index rose 0.1 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.6 per cent.

The drop in the yen provided a welcome boost to Japan’s Nikkei which reversed early losses to rise 1.6 per cent.