Australia

Australian shares are set to edge lower after Wall Street eked out gains in volatile trading ahead of tomorrow’s US inflation report which is expected to show signs prices are peaking.

ASX futures were down 8 points or 0.1% at 7014 as of 8.00am on Wednesday, pointing to a negative start to trading for the fourth day in a row.

Overseas, all three major US indexes opened higher, with the technology-heavy Nasdaq Composite up 2.8% at one point. By late morning, stocks had mostly erased those gains and appeared on track to extend a brutal three-day slide. But as the afternoon wore on, investors turned their attention to Wednesday's report on consumer prices and the possibility that inflation may be peaking -- and stocks rebounded again.

The S&P 500 closed up 0.2%, a day after the broad index slumped 3.2% to its lowest level for the year. The Nasdaq Composite Index climbed 1%.

"The market was taking too negative of a read on the consumer-price index, leading to the afternoon recovery," said Matt Peron, director of research at Janus Henderson Investors.

The Dow Jones Industrial Average fell for a fourth straight trading session, hitting a 52-week low. It closed down 84.96 points, or 0.3%, at 32160.74.

Markets are enduring the worst selloff in years as aggressive moves to hike interest rates coincide with a global economy reeling from the lingering effects of Covid, war in Ukraine and harsh lockdowns in China.

A parade of US Federal Reserve officials on Tuesday reaffirmed the central bank will continue to take rates higher. New York Fed President John Williams said the bank aims to “expeditiously” bring interest rates back to more normal levels this year. His colleague from Cleveland hinted a 0.75% rate hike could be necessary later this year if inflation stays high, days after Chair Jerome Powell ruled it out.

Locally, the S&P/ASX 200 closed 1.0% lower at 7051.2, dragged down by miners and energy companies. Almost all sectors finished the day in the red, with only telecom stocks finishing slightly higher.

Ten of the ASX's 11 official sectors were down, with telecommunications managing to eke out modest 0.4% gains as realestate.com.au owner REA Group rose 5.5% to a four-day high of $113.16.

Materials was the worst performing sector, losing 2.4%, while energy stocks finished the day 2.1% lower. BHP, Rio Tinto and Fortescue fell 2.6%, 3.6% and 2.7%, respectively. Santos slid 1.7%, while Woodside Petroleum lost 2.6%.

Pendal was one of the day's best performers, advancing 8.1% after reporting a 1H profit beat.

"Pendal Group has delivered a solid first-half result in a tough environment for asset managers," said chief executive Nick Good.

Commodities continued to slide as fears of a growth slowdown in China hit sentiment. Brent crude oil fell 4.1% to US$101.60 a barrel. Iron ore fell 2.5% to US$128.10. Gold slipped 1% to US$1841.00.

In bond markets, the yield on the Australian 2 Year government bond slipped to 2.66% while the 10 Year was flat at 3.56%. Overseas, yields on US Treasury 2 Years nudged up to 2.61%, while the 10 Year edged down to 2.99%.

The Australian dollar edged lower, buying 69.38 US cents as of 7.00am on Wednesday, down from the previous close of 69.51. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies was flat at 96.49.

Asia

Chinese stocks ended higher as the markets recovered from their opening losses. The Shanghai Composite Index closed 1.1% higher at 3035.84, the Shenzhen Composite Index rose 1.5% to 1894.39, while the ChiNext Price Index advanced 2.2% to 2276.34. Developments relating to China's Covid-19 lockdowns, particularly in the financial hub of Shanghai, will remain in focus. "From a global perspective, the Shanghai lockdown implies a further disruption to global supply chains as well as a negative impact on Chinese domestic demand," Commerzbank analysts say in a research note. Agricultural Bank of China added 0.7% and Bank of China rose 0.3%.

Hong Kong shares ended 1.8% lower, extending a losing streak to four sessions as tech stocks weighed. The Chinese tech sector tracked losses in US markets overnight, with JD.com slumping 8.2%, Alibaba Group shedding 4.8% and Tencent Holdings closing 2.3% lower. Property group Country Garden Services topped the laggards with an 11% slide, while peer Country Garden Holdings weakened 8.4%. Car maker BYD slid 5.9% following news that authorities are probing emissions from one of its factories. Great Wall Motor was down 5.4% after April sales volume plunged 41% on year. The benchmark Hang Seng Index finished down 1.8% at 19633.69.

The Nikkei Stock Average closed 0.6% lower at 26167.10, amid worries over supply-chain disruptions and higher cost of raw materials. Energy-related stocks ended lower, with Idemitsu Kosan off 4.4% and Fuji Oil slipping 5.4%. General trading company Sumitomo Corp. fell 8.9% after it projected a 20% decline in its FY net profit. Gas-stove maker Rinnai Corp. rose 7.5% after it announced a share buyback and guided a 7.4% rise in FY net profit.

Europe

The pan-European Stoxx Europe 600 index closed up 0.7% at 420.29, recovering after sliding to a two-month low of 417.46 on Monday, though gains were limited given the scale of the drop in recent days.

"After the sharp falls of last Friday and yesterday, some cautious buying has come in, but it looks like the best that they buyers can muster is a holding action for now," says IG analyst Chris Beauchamp in a note.

Concerns linger about the risk of high inflation and rising interest rates stifling economic growth, war in Ukraine and lockdowns in China. Germany's DAX rose 1.2%, France's CAC 40 was up 0.5%.

London’s FTSE 100 closed up 0.4% on Tuesday boosted by financial and healthcare stocks as fears around recession risks and higher interest rates subsided. Melrose was the day's biggest riser, up 3.8%, followed by Phoenix Group Holdings, which rose 3.4%. IAG was the day's biggest faller, which fell 3.5%, followed by Airtel Africa and Informa, down 2.7% and 2.2%, respectively.

"It is also notable that while we are seeing some decent gains today consumer staples are still lagging the wider market, showing that investors remain concerned about consumption trends, and the effect higher inflation will have on consumer spending patterns," Michael Hewson, analyst at CMC Markets UK, said in a note.

North America

US stocks swung between gains and losses on Tuesday as uncertainty over inflation, interest rates and the economy continued to weigh on the market.

All three major indexes opened higher, with the technology-heavy Nasdaq Composite up 2.8% at one point. By late morning, stocks had mostly erased those gains and appeared on track to extend a brutal three-day slide. But as the afternoon wore on, investors turned their attention to Wednesday's report on consumer prices and the possibility that inflation may be peaking -- and stocks rebounded again.

The S&P 500 closed up 9.81 points, 0.2%, at 4001.05, a day after the broad index slumped 3.2% to its lowest level for the year. The Nasdaq Composite Index climbed 114.42 points, or 1%, to 11737.67.

"The market was taking too negative of a read on the consumer-price index, leading to the afternoon recovery," said Matt Peron, director of research at Janus Henderson Investors.

The Dow Jones Industrial Average fell for a fourth straight trading session, hitting a 52-week low. It closed down 84.96 points, or 0.3%, at 32160.74.

A cocktail of geopolitical risks and economic headwinds is posing the biggest threat to global growth in years and rattling markets. In the US, soaring inflation has prompted the Federal Reserve to begin raising interest rates and investors fear the move could tip the economy into recession.

Global markets are looking equally troubled. In China, resurgent Covid-19 outbreaks and Beijing's strict approach to fighting them threaten to revive the supply chain bottlenecks that first drove inflation higher. In Europe, the war in Ukraine threatens to keep energy prices elevated and is weighing on the region's growth.

"People came in this morning expecting a relief rally after being hammered the last few days," said Joe Quinlan, head of CIO Market Strategy for Merrill and Bank of America Private Bank. "But with inflation in the US, the Covid challenges in China and the war in Ukraine, rarely have we seen three major market-moving catalysts converge."

Early Tuesday, some investors snapped up shares that had been battered by those headwinds.

"Everyone at this point is looking to see if we've bottomed," said Quincy Krosby, Chief Equity Strategist for LPL Financial. "The instincts are that we haven't bottomed yet."

Wednesday's report on fresh consumer-price index data is expected to show inflation rose at a slower pace in April than the previous month, Ms. Krosby said.

Investor sentiment can turn on a dime, she added. In January 2019, a speech by Fed Chairman Jerome Powell signaled the central bank would be patient with rate increases -- reversing a steep market selloff.

The market has entered a new era, Mr. Quinlan said, and investors are more inclined to wait for solid evidence that those challenges have subsided before betting the stocks have reached a bottom.

"Investors are very skeptical now," he said. "They want to see the data. They don't want to listen to policy makers. Any improvements build the scaffolding for the bottom. But we're not there yet."

Federal Reserve Bank of New York President John Williams said Tuesday that he believes the Fed can achieve a "softish landing" for the US economy while raising rates, though the unemployment rate could rise.

"By 2023 you are very likely to see growth slowing very significantly, and the specter of recessions is really starting to loom," said Seema Shah, chief strategist at Principal Global Investors. "What we are seeing is the realization that it is going to be very tough for the Fed to get that soft landing just right."

Investors on Tuesday were welcoming signs that the conflict in Ukraine wasn't escalating and a planned EU embargo on Russian oil could face delays, Ms. Shah said.

Peloton Interactive fell $1.23, or 8.7%, to $12.90 after reporting declining sales and mounting losses as the stationary-bike maker struggles with the return to prepandemic consumer habits.

Biohaven Pharmaceutical Holding Co. surged by $56.86, or 68%, to $140 after Pfizer said it would buy the rest of the company for around $11.6 billion.

Duke Realty rose $1.87, or 3.9%, to $49.58 after Prologis said it had made an offer to buy the real-estate investment trust for about $23.7 billion. Prologis fell $6.96, or 5.3%, to $125.41.

The yield on the benchmark 10-year Treasury note edged down to 2.990% from 3.080% on Monday.

Brent crude oil fell $3.48, or 3.3%, to $102.46 a barrel. Oil prices had been rising for the past few months, but concerns that China's lockdowns will sap demand for commodities have taken some steam off the rally.

Demand for oil in China is likely to rebound sharply when restrictions start to ease, though the European Union's proposed ban on imports of Russian oil remains an overhang, said Daniel Hynes, a senior commodity strategist at ANZ in Sydney.

"The fundamentals are still very tilted toward an extremely tight market with certainly risks skewed to further declines in supply over the next three to six months," Mr. Hynes said.

Bitcoin prices edged lower after a steep selloff. The world's largest cryptocurrency on Tuesday traded at $30,959.99 as of 5 pm New York time, down 0.4% from $31,075.70 at the same time a day earlier.