By Marc Jones

LONDON (Reuters) – Traders ditched riskier assets on Monday as relief over Emmanuel Macron’s French presidential election win quickly gave way to renewed concerns about the global economy and the impact on it of rising interest rates.

Asian markets suffered their worst session in over a month overnight as worries that Beijing could soon be back in lockdown sent Chinese shares back to 2020 lows, and as the effects of Wall Street’s 2.5% slump on Friday lingered. [.N].

The bashing immediately continued in Europe. The STOXX 600 index dropped to its lowest since mid-March, led by 2% and 1.9% drops in French and German shares. The euro slid 0.7% to its lowest since the initial bout of COVID-19 panic in March 2020.

“The reality is there is more to the French election story than Macron’s win yesterday,” said Rabobank FX strategist Jane Foley.

Not only are there parliamentary elections still to come in France in June, but Macron also seems likely keep the pressure up for a Europe-wide ban on Russian oil and gas imports, which would cause serious economic pain, at least in the short term

“We had German officials saying last week that if there was an immediate embargo of Russian energy then it would cause a recession in Germany. And if there was a recession in Germany, that would drag the rest of Europe down and have knock on effects for the rest of the world,” Foley said.

MSCI’s broadest index of world shares slid 0.7% to a six-week low. Oil fell over 4% in commodity markets and the worries about Beijing saw the skid to a one-year low.

State television in China reported that residents were ordered not to leave Beijing’s Chaoyang district on Monday after a few dozen COVID cases were detected over the weekend.

The China-sensitive Australian dollar fell as much as 1.2% while the U.S. dollar climbed unhindered to a two-year high, hitting $1.0707 against the euro and 1.2750 versus Britain’s pound. [FRX/]

Much focus on is on how fast and far the Federal Reserve will raise U.S. interest rates this year and whether it will, along with all the other global worries, tip the world economy into recession.

This week is also a packed one for corporate earnings. Almost 180 firms are due to report. Big U.S. tech will be the highlight, with Microsoft (NASDAQ:) and Google (NASDAQ:) both on Tuesday, Facebook (NASDAQ:) on Wednesday and Apple (NASDAQ:) and Amazon (NASDAQ:) on Thursday. [.N]

In Europe, 134 of the will also report, including banks HSBC, UBS and Santander (BME:) on Tuesday, Credit Suisse (SIX:) on Wednesday, Barclays (LON:) on Thursday and NatWest and Spain’s BBVA (BME:) on Friday. ()

“I wonder whether just meeting expectations will be enough, it just feels like maybe we’ll need a bit more,” said Rob Carnell, ING’s chief economist in Asia, referring to jitters about big tech following a dire report from Netflix (NASDAQ:) last week.

“It’s guidance about the future which will be as important as anything and I suspect most of these firms are going to be coming out and saying it all looks rather uncertain, which I don’t think is going to really help.”

FEAR FACTOR

U.S. markets fell on Friday, when the Dow Jones had its worst day since October 2020 and the CBOE volatility index, dubbed Wall Street’s “fear gauge,” leapt higher. [.N]

“Concerns around rates and recession are now the biggest risks for investors” with a particular focus on demand, said Candace Browning, head of global research at Bank of America (NYSE:).

“Spiking food and gasoline prices plus the end of key stimulus programs has investors concerned about the low-income consumer’s ability to spend.”

Monday’s selloff in Asia also saw Hong Kong’s fall 3.7% and the Shanghai composite slide nearly 5%.

China’s central bank had fixed the mid-point of the yuan’s trading band at its lowest level in eight months, seen as an official nod for the currency’s recent slide, and the yuan was sold further to a one-year low of 6.5092 per dollar.

Metals were mangled too. Dalian iron ore fell more than 9%. , a bellwether for economic growth, dropped 1.6% and futures fell 4.5% to a two-week low of $101.78 a barrel. [O/R]

Palm oil, meanwhile, jumped 6% and the Indonesian rupiah slid following a ban exports from Indonesia that further stokes worldwide food price pressure.

The higher dollar pushed 0.8% lower to $1,913 an ounce. hovered just below $40,000.

The bond markets steadied at least. The benchmark 10-year yield was at 2.8738% while Germany’s 10-year yield, the benchmark for Europe, was down 9 bps to 0.87%. France’s 10-year yield was also down around 9 basis points at 1.34%. [GVD/EUR][US/]

This week will also see the release of U.S. growth data, European inflation figures and a Bank of Japan policy meeting, which will be watched for any hints of a response to a sharp fall in the yen, which has lost 10% in about two months.