US stocks markets closed slightly lower on Monday after last week's solid performance, as inflation woes and the monetary policy outlook remained at the forefront of concerns. The Dow 30 and the S&P 500 edged down 0.2% and 0.3%, respectively, while the NASDAQ led losses with a 0.9% drop, weighed down by Amazon (-2.8%) and Alphabet (-1.8%). On the data front, new orders for US-made capital goods went up for the third consecutive month, indicating that business spending plans remain strong despite higher interest rates and inflation. On the corporate side, Spirit Airlines fell 8.0% after the company announced that it would accept Frontier Group's latest takeover bid. Bucking the trend, BioNTech jumped 7.2% after the drugmaker stated that its Omicron-based Covid-19 booster improves immune response As the last week of the quarter begins, the three main indexes are headed for their first back-to-back quarterly decline since 2015.

New orders for US-made capital goods went up 0.7% mom in May of 2022, the third straight month of gains. Figures beat market forecasts of a 0.1% rise, in a sign that business spending plans remain strong so far despite higher interest rates and inflation. Orders for transportation equipment led the increase (0.8%), followed by capital goods (0.8%), machinery (1.1%), and computer and electronics (0.5%). Orders for non-defense capital goods excluding aircraft, a proxy for investment in equipment, rose 0.5%, after a 0.3% gain in April.

The dollar index traded eased below 104 on Monday, extending last week’s declines, on expectations that the Federal Reserve won’t need to go as far as previously thought, following signs that inflationary pressures have started to ease. The revision in the inflation outlook comes at a time when raw material and oil prices are set for a significant drop on a monthly basis, the first in oil prices this year, and the steepest in copper prices since March 2020. Also, mounting recession woes prompted caution, after Fed Chair Jerome Powell suggested that a recession could be possible as the Federal Reserve was focused on curbing inflation, and a slew of weak economic data. Later this week, the focus will be on personal consumption expenditure data from May, which includes the Fed’s preferred inflation gauge and the evolution of personal spending in the US, for more clues on the inflation and interest rate outlook.

WTI crude futures bounced back firmly from earlier losses, rising 2% to above the $110-per-barrel mark on Monday, as G7 countries prepare to introduce a price cap mechanism on Russian oil. Leaders of the Group of Seven pledged support to Ukraine “for as long as it takes”, while discussing ways of hurting the Kremlin’s revenue sources. The oil price cap would work by imposing restrictions on insurance and shipping, allowing only the transportation of Russian crude and petroleum products sold below an agreed threshold. Meanwhile, indirect negotiations between the US and Iran are set to restart in the coming days, with the EU acting as a mediator. Elsewhere, investors await official government figures on US weekly inventories after technical problems delayed the release originally set for last week.

European equities rose for a second straight session on Monday, with the pan-European STOXX 600 advancing roughly 1% and building on the momentum from last week's solid performance, driven by gains in the technology sector. The Netherland-based global consumer Internet group soared almost 16% following the announcement of a plan to gradually sell off its 28.9 percent stake in Chinese software behemoth Tencent. Still, sentiment remains fragile amid persistent concerns about the pace of economic recovery under the backdrop of a tightening policy cycle to tame record-high inflation. Meanwhile, G-7 leaders gather in Germany with energy prices high on the agenda as surging energy cost has been the main driver of inflation and thus central bank decisions. Domestically, the benchmark DAX 40 also enjoyed some respite, adding 0.5% to finish around 13,190 points.

The Federal Reserve Bank of Dallas' general business activity index for manufacturing in Texas declined to -17.7 in June of 2022 from -7.3 in May, remaining the lowest since May 2020. The production index, a key measure of state manufacturing conditions, fell from 18.8 to 2.3, reaching its lowest reading since May 2020. The new orders indexed dipped into negative territory for the first time in two years (-7.3 vs 3.2) and the growth rate of orders index pushed further negative (-16.2 vs -5.3) while the capacity utilization and shipments indexes remained positive but fell markedly (1.2 vs 3.3). Labor market measures continued to indicate robust employment growth and longer workweeks. On the price front, prices and wages continued to increase strongly. Finally, expectations regarding future manufacturing were notably less optimistic than in May.