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World stocks have been on the back foot and the dollar has stayed close to one-year highs on concerns that higher inflation, supply shortages and China's property sector problems would put global economic recovery at risk.
Stock markets slipped to 2-1/2-month lows last week, following a torrid September that saw them shed more than 4 per cent as US Treasury yields surged 20 basis points, the Federal Reserve signalled its readiness to start unwinding stimulus this year and Chinese property giant Evergrande headed for default.
Those factors remain in play, with trading in Evergrande shares suspended, days after it missed a second set of interest payments on offshore debt.
Media reports that Evergrande would sell a stake in its property management unit for over $5 billion did little to sooth sentiment.
Asian shares weakened, led by a 2.7 per cent loss in Hong Kong while Japan's Nikkei slipped around 1 per cent.
European bourses seesawed around flat and Wall Street futures were firmly in the red, with those for the tech-heavy Nasdaq down 0.7 per cent.
A couple of events are focusing investors' minds. First up is Monday's OPEC-plus meeting, which comes as crude prices hover near three-year highs of close to $80 a barrel. Gas pries too show no sign of easing, rising to a new high of 96 euros per megawatt hour in Europe.
More important is Friday's monthly US payrolls data which a Reuters poll forecast will show 500,000 jobs added last month.
"All roads this week point to payrolls Friday, as unless there is a marked deterioration across the whole sweep of labour market indicators within the report, this will likely be the catalyst to cement the November taper," Deutsche Bank told clients.
US economic data on Friday showed robust consumer spending and factory activity, but fears are inflation will keep accelerating, due to spiking energy prices, labour shortages and supply glitches. That could force central banks to tighten policy sooner and further than expected.
Already, the core US PCE price index, the Fed's preferred inflation measure, increased 3.6 per cent in August from a year earlier, its biggest rise in three decades while euro zone inflation hit a 13-year high
While Fed boss Jerome Powell and other policymakers insist high inflation is transitory, Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, noted "Powell also recently starting to hedge his comments too, leading investors to suspect he, too, is worried about inflation".
Those concerns kept a sustained bid for the dollar, which is close to one-year highs against a basket of currencies and looks set for its biggest annual rise since 2015.
The greenback eased slightly on Monday, allowing the euro bounce to $1.16145, off Thursday's 14-month low of $1.1563. It also dipped to 111.135 yen, staying below Thursday's 1-1/2-year high of 112.08 yen.
US bond yields too pulled away from last week's multi-month peaks, with 10-year yields at 1.489 per cent, off Tuesday's three-month high of 1.567 per cent.
The offshore-trade yuan meanwhile fell a quarter per cent at 6.4520 as investors weighed the overall Evergrande impact. They also awaited a speech by US Trade Representative Katherine Tai on the Biden administration's strategy for US-China trade ties.
"The biggest problem is not a default by Evergrande but the environment that has led to its downfall. Authorities are regulating housing loans and lending to property firms. Markets are looking for a next Evergrande already," said Kazutaka Kubo, senior economist at Okasan Securities.
"There is rising risk Evergrande's woes will spread to the entire Chinese property sector."