Global shares in the red ahead of U.S. data, earnings season

Oil prices, dropped by more than 2% on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output, offsetting worries about escalating tensions in the Middle East

Global shares slipped into the red on Monday and investors, wary of rate hike bets, braced for U.S. inflation data and a corporate reporting season where robust results are needed to justify high valuations.

Meanwhile, disruptions in the Red Sea raised shipping costs in Europe.

European oil and gas stocks dropped 1.8% on the STOXX 600 as crude prices declined after sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output.

Oil prices, dropped by more than 2% on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output, offsetting worries about escalating tensions in the Middle East.

Early gains during Asian trading faded as MSCI's broadest index of stocks declined around 1% after dropping 2.5% last week.

European stocks declined, extending their lacklustre start to 2024 weighed down by tepid energy shares, while an increase in government bond yields weighed on risk sentiment.

The pan-European STOXX 600 was last down 0.3%, extending the previous week's drop of 0.5%, while U.S. stock futures pointed to a weak open for Wall Street on Monday.

Japan's Nikkei was closed for a holiday, while Chinese blue chips shed 1.1% to hit near five-year lows.

We foresee that continuing disinflation will eventually lead the Fed to cut rates in May, said Bruno Schneller, MD at INVICO Asset Management.

However, given the mixed signals from inflation data, policymakers are expected to hold off on easing measures until then, Schneller said.

Data on Friday showed U.S. employers hired more workers than expected in December, dashing expectations of rapid easing of interest rates. Nevertheless, a survey from the Institute for Supply Management (ISM) showed activity in the services sector declined in December, pointing to a weaker economy.