Stocks skidded lower in Asia on Monday after a surprise drop in US unemployment quashed any thought of a pivot on policy tightening ahead of a reading on inflation which is expected to see core prices move higher again.
Geopolitical tensions added to the uncertainty as markets waited to see how the Kremlin might respond to the blast that hit Russia's only bridge to Crimea.
Holidays in Japan and South Korea made for thin trading in Asia, while the Treasury market is also shut on Monday.
S&P 500 futures ESc1 led the early action with a drop of 0.5%, while Nasdaq futures NQc1 fell 0.6% as US earnings season kicks off later this week.
EUROSTOXX 50 futures STXEc1 lost 0.7%, while FTSE futures FFIc1 fell 0.5%.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 1.0%. Nikkei futures NKc1 traded at 26,600 compared to Friday's cash close of 27,116 .N225.
Chinese blue chips .CSI300 were flat after a survey showed the first contraction in services activity in four months.
China's semiconductor index .CSIH30184 fell more than 5% after Washington published a sweeping set of export controls, including a measure to cut China off from certain semiconductor chips made anywhere in the world with US equipment.
Wall Street sank on Friday after an upbeat payrolls report seemed to seal the deal on another outsized rate hike from the Federal Reserve.
Futures 0#FF: imply a more than 80% chance of rates rising by 75 basis points next month, while the European Central Bank (ECB) is expected to match that and the Bank of England to hike by at least 100 basis points.
"We are in the midst of the largest and most synchronised tightening of global monetary policy in more than three decades," said Bruce Kasman head of economic research at JPMorgan, who expects hikes of 75 basis points from all three of the central banks.
"The September CPI report should show a moderation in goods prices that is a likely harbinger of a broader slowing in core inflation," he said. "But the Fed will not be responsive to a whisper of inflation moderation as long as labour markets shout tightness."
Headline consumer price inflation is seen slowing a touch to an annual 8.1%, but the core measure is forecast to accelerate to 6.5% from 6.3%. The US CPI data will be released on Thursday at 8:30 am ET (1230 GMT).
Minutes of the Fed's last policy meeting are also out this week and are likely to sound hawkish given how many policy makers lifted their dot plot forecasts for rates.
Wall Street also faces a testing time on corporate earnings with the major banks kicking off the season on Friday, including JPMorgan, Citi, Wells Fargo and Morgan Stanley.
"Consensus expects 3% year/year EPS growth, 13% sales growth, and 75 bp margin contraction to 11.8%," analysts at Goldman Sachs said in a note. "Excluding Energy, EPS is expected to fall by 3% and margins to contract by 132 bp."
"We expect smaller positive surprises in 3Q compared with 1H 2022 and negative revisions to 4Q and 2023 consensus estimates."
One likely bone of contention will be the strength of the dollar which will pressure offshore earnings.
The dollar index was firm at 112.75 =USD having risen the for the past three sessions. It stood at 145.50 yen JPY=EBS but had so far shied away from the recent 24-year top of 145.90 for fear of Japanese intervention. USD/
The euro looked vulnerable at $0.9738 EUR=EBS, having retreated from a high of $0.9999 last week.
Sterling fared little better at $1.1090 GBP=D3, with traders on edge as the Bank of England is due to end its emergency bond buying campaign on Friday.
Yields on 10-year bonds GB10YT=RR are still up at 4.237% and a long way from the 3.31% level held before the British mini-budget sent the market into a tailspin. GBP/
The climb in the dollar and yields has been a burden for gold, which was hovering at $1,693 an ounce XAU=. GOL/
Oil prices ran into profit-taking after Brent climbed 11% last week in the wake of a deal on supply reductions by OPEC+. O/R
Brent LCOc1 eased 84 cents to $97.08 a barrel, while US crude CLc1 fell 80 cents to $91.84 per barrel.