LONDON – Stocks fell again on Monday and the dollar rocketed to a new two-decade high as worries about higher interest rates deepened investors' fears that the global economy is headed for a slowdown.

After a bruising session on Friday in which US stocks sold off sharply as another rise in long-dated US Treasury yields unnerved investors, markets were set for a rocky start to the week, with most indexes in the red.

Central banks in the United States, Britain and Australia all raised interest rates last week, and investors are bracing for more tightening as policymakers try to get on top of soaring inflation.

There was plenty more for investors to worry about on Monday aside from tightening financial conditions.

Despite the sharp rise in rates, not all investors think a slowdown is imminent.

"We continue to believe investors should position for the reality of inflation now, rather than the chance of a recession soon," said UBS Global Wealth Management strategists.

Wall Street headed for another weaker open with the S&P 500 stock futures down 1 percent, while Nasdaq futures shed 0.9 percent. US 10-year bond yields reached a new 3-1/2 year high of 3.179 percent.

The Euro STOXX weakened 0.56 percent, while Germany's DAX lost 0.21 percent.

MSCI's main emerging market stocks index fell to its lowest level since July 2020.

The MSCI World Index fell 0.5 percent, leaving it not far from the 17-month intraday low reached on Friday.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.27 percent and Japan's Nikkei 2.53 percent. Chinese blue chips eased 0.8 percent.

Investors are also tense ahead of the US consumer price report due on Wednesday. Only a slight easing in inflation is forecast, and certainly nothing to prevent the Federal Reserve from hiking by at least 50 basis points in June.

Core prices are actually seen rising by 0.4 percent in April, the monthly rate accelerating from 0.3 percent in the previous month, even as the annual pace dips a bit due to base effects.

With investors juggling so many worries, one place they are looking for safety is in the dollar, which is soaring against most other currencies.

The dollar index, which measures the greenback against a basket of currencies, rose as much as 0.4 percent to 104.19 , the latest in a string of 20-year highs.

"Risk appetite is fragile and yield spreads continue to suggest further upside on the Dollar Index," said Sean Callow, a senior FX strategist at Westpac.

"We look for ongoing demand for DXY (the dollar index) on dips, with 104 already being probed and still potential for a run towards 107 multi-week."

The soaring dollar is hammering other currencies. The euro dropped back below $1.05 while the Japanese yen fell to its weakest since 2002 .

Expectations that the Fed will move more aggressively in raising interest rates are supporting the dollar, as is a sense among investors that the US economy will hold up better than a euro zone hit hard by the fallout from the conflict in Ukraine.

But interest rates are also rising in the euro zone. On Monday, Germany's 10-year bond yield hit a new highest level since 2014, buoyed by hawkish policymaker Robert Holzmann saying on Saturday that the European Central Bank should raise interest rates three times this year to combat inflation.

The diary is full of Fed speakers this week, giving them plenty of opportunity to keep up the hawkish chorus.

Oil prices see-sawed after the Group of Seven nations committed on Sunday to banning or phasing out imports of Russian oil over time.

Brent was last quoted down 1.07 percent at $111.21, while US crude dropped 1.16 percent to $108.51.

Gold was down 0.7 percent at $1,869 an ounce , having struggled recently to gain any traction as a safe haven.