US stock futures fell on Tuesday as risk aversion sentiment gripped markets amid fears that the central bank's tight monetary policy will undermine economic growth. The dollar rose and Treasury yields stabilized.

The S&P 500 and Nasdaq 100 futures contracts dropped by at least 1% and continue declining as Treasury yields hovered at their highest levels in nearly a month.

Investors are reluctant to take the risk amid fears that the policy to combat inflation will get out of control and stifle economic recovery.

The Stoxx50 index fell as shares of telecom and technology companies were considered. Target Corp. stock went down in the premarket after the retailer cut its profit outlook for the second time in three weeks amid an inventory surplus.

Rising bond yields are adding to concerns about risks to economic growth as central banks start tightening their monetary policy. US benchmark Treasury yields stabilized near 3%, a psychological threshold that could burden new supply this week ahead of important inflation data.

The US Consumer Price Index for May will be released on Friday. It will help traders discern the Fed's rate path and whether the interest rate will continue to hike in 50-basis point increments. Strong hiring data last week provided some justification for the central bank's aggressive approach.

The European Central Bank is likely to announce on Thursday that it will end its asset purchases and cement the path to exiting from eight years of negative interest rates.

Earlier, the Reserve Bank of Australia stunned the market with an outsized hike to combat rising costs. The RBA responded to price pressure with its biggest rate increase in 22 years predicted by just three of 29 economists and indicated that it remained committed to "doing what is necessary" to rein in inflationary pressures.

The Moscow Exchange Index continues to gradually decline amid Western sanctions:

Key events to watch this week::

• Reserve Bank of India rate decision, Wednesday
• European Central Bank rate decision, Christine Lagarde briefing, Thursday
• US Consumer Price Index, University of Michigan consumer sentiment, Friday
• China Consumer Price Index, PPI Friday