LONDON – Global shares fell on Monday after a series of explosions in the Ukrainian capital and renewed concern about the economic outlook sent investors into safe-haven assets such as the dollar and bonds.

Any belief that the Federal Reserve will shift to a softer stance towards monetary policy was extinguished on Friday by data that showed unemployment fell in September, signaling a labor market that is not suffering from red-hot inflation.

The dollar held firm against a basket of currencies, while a number of market-based measures of investor risk nervousness showed another increase.

The MSCI All-World index fell 0.5 percent in early trading in Europe, down for a fourth day in a row. The pan-European STOXX 600 fell 0.5 percent to its lowest in a week, while Germany's DAX lost 0.1 percent and the FTSE 100 fell 0.7 percent, making it one of the weaker performing indices.

S&P 500 futures fell 0.5 percent, while those on the Nasdaq lost 0.6 percent.

Wall Street sank on Friday after an upbeat payrolls report cemented expectations for another large rate hike. 

Futures imply a more than 80 percent chance of rates rising by 75 basis points next month, while the European Central Bank is expected to match that and the Bank of England to hike by at least 100 basis points. 

Core measure

US consumer inflation is expected to have moderated to an annual 8.1 percent, but the core measure is forecast to have accelerated to 6.5 percent from 6.3 percent. The US CPI data is due on Thursday.

"We are in the midst of the largest and most synchronized 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 labor markets shout tightness."

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.

Although US inflation and the Fed's response to it remain front and center of investors' minds, euro zone government bonds got a boost from the pickup in investor risk aversion.

German 10-year Bund yields, which serve as the region's benchmark, eased 3 basis points to 2.162 percent, while the more sensitive 2-year Schatz fell 8 bps to 1.787 percent.

Earnings test

Corporate earnings also kick off on Friday, with JPMorgan, Citi, Wells Fargo and Morgan Stanley reporting results.

"Consensus expects 3 percent year/year EPS growth, 13 percent sales growth, and 75 bp margin contraction to 11.8 percent," analysts at Goldman Sachs said in a note. "Excluding Energy, EPS is expected to fall by 3 percent 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."

The dollar index rose 0.3 percent to 113.14, leaving the euro down 0.4 percent at US$0.9697 and the yen flat at 145.45, a whisker away from the recent 24-year high of 145.90 that prompted Japanese intervention.

Sterling lost 0.3 percent to US$1.10625 , after the Bank of England announced a surprise decision to shore up the gilt market ahead of the end of an emergency bond-buying program on Friday. 

Oil fell for the first time in a week, as investors took profit on last week's 11 percent rally after a deal on supply reductions by OPEC+.

Brent fell 0.7 percent to US$97.26 a barrel, while US crude dropped 0.6 percent to US$92.08 a barrel.