Stock markets and oil prices slid Monday with a fresh Covid flare-up in Shanghai fanning fears of another painful lockdown in China's biggest city.
European equities headed south following hefty losses for most main Asian markets, with all eyes on how Wall Street would react at the US reopening.
A forecast-busting US jobs report Friday indicated the world's top economy was coping with Federal Reserve interest rate hikes, giving the central bank further room for more tightening as it battles soaring inflation.
"This week sees three catalysts which could shake investors out of their torpor as we get the latest reading of US inflation, GDP (gross domestic product) figures from China and the big US banks kick-off the second quarter earnings season across the Atlantic," said AJ Bell investment analyst Danni Hewson.
Traders were keeping tabs on US President Joe Biden as he weighs removing some of the tariffs on Chinese goods worth hundreds of billions of dollars that were imposed by predecessor Donald Trump.
China growth fears
The prospect of another lockdown sparked an equities sell-off in Hong Kong and Shanghai on Monday.
Chinese tech firms took a battering after authorities fined giant Tencent and Alibaba over not properly reporting past deals.
Hong Kong-listed casino operators were also sharply lower after officials in Macau embarked on a week-long lockdown to curb its worst coronavirus outbreak.
There were also losses in Sydney, Seoul, Taipei, Manila, Mumbai, Jakarta and Wellington.
However, there Tokyo rose as traders welcomed Japan's ruling bloc securing a strong win in Sunday's upper house election, held days after the assassination of former premier Shinzo Abe.
The result should provide the government with some stability, while there were also hopes for a cabinet reshuffle and economic stimulus.
Shanghai recorded more than 120 virus cases at the weekend, having seen its first one of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.
With China fixated on its zero-Covid strategy of wiping out the disease, there is increasing concern that authorities will revert to another painful lockdown, with Shanghai residents having only emerged from a two-month confinement in June.