European shares down 1.3, SP 500 futures off 0.8
Dollar tops 137 yen before U.S. CPI, inflation expectations
Banks kick off earnings season from Thursday

SYDNEYLONDON, July 11 Reuters Shares slid on Monday as investors braced for a U.S. inflation report that could force another supersized hike in interest rates, and the start of an earnings season in which profits will be under pressure.

The STOXX index of European shares fell 1.3, with SP 500 futures down 0.8 and Nasdaq futures off 0.9 as an upbeat U.S. June payrolls report raised expectations of a 75 basis point hike from the Federal Reserve.

MSCI39;s broadest index of AsiaPacific shares outside Japan slipped 1.8, while Chinese blue chips lost 1.9 after Shanghai discovered a COVID19 case involving a new subvariant, Omicron BA.5.2.1.

Bond yields and the rampant U.S. dollar also rose, the latter hitting a 24year peak against the yen.

Underlining the global nature of the inflation challenge, central banks in Canada and New Zealand are expected to tighten policy further this week.

While Wall Street did eke out some gains last week, the market mood will be tested by earnings from JPMorgan and Morgan Stanley on Thursday, with Citigroup and Wells Fargo the day after.

Another hurdle will be Wednesday39;s U.S. consumer price report, in which markets see headline inflation accelerating further to 8.8 but a slight slowdown in the core measure to 5.8.

An early reading on consumer inflation expectations this week will…