Australia

Australians are poised to fall in line with Wall Street following fresh data showing US inflation eased less than hoped, stoking fears rates will need to rise further and faster than expected.

ASX futures were down 35 points or 0.5% at 7010 as of 8.00am on Thursday, suggesting a negative start to trading.

Overseas, the S&P 500 declined 1.6%. The Dow Jones Industrial Average fell 1%, while the technology-focused Nasdaq Composite was down 3.2%, its lowest close since November 2020. The day offered no relief for anxious stock investors, who have been bracing for the Fed to remove more of its economic support.

Trading was bumpy. The S&P 500 turned lower in the afternoon after spending much of the morning in the green, and its losses deepened as the closing bell neared. There is a long way to go before rising prices come back under control, investors and analysts warned, giving rise to volatility as financial conditions continue to tighten.

"The Band-Aid is still coming off slowly," said Michael Farr, the chief executive of investment advisory Farr, Miller & Washington. "According to the Fed, we're not near the end of this process that everyone wants over."

The US consumer-price index increased 8.3% in April from the same month a year ago, data released Wednesday morning showed, decelerating from an 8.5% annual rate in March but above the 8.1% expected by economists. Lower annual inflation last month marks the first monthly easing of price increases since August 2021.

Short-term bonds sold off while longer term debt rose, indicating traders may be concerned about higher rates weighing on growth. Yields on US Treasury 2 Years nudged up to 2.64%, while the 10 Year edged down to 2.92%.

Locally, the S&P/ASX 200 closed 0.2% higher at 7064.7 after gains by iron-ore miners and health stocks helped the benchmark index to recover early losses.

The ASX 200 dropped 0.8% in early trade after the Dow Jones Industrial Average fell for a fourth straight session, before steadily grinding its way back toward parity.

BHP, Fortescue Metals and Rio Tinto put on between 1.4% and 2.6% amid higher iron-ore prices.

CSL led the health sector higher, rising 2.1%. Financial stocks weakened, with National Australia Bank falling 3.9% after it traded ex-dividend. Rival banks CBA, Westpac and ANZ gave up between 0.2% and 1.6%.

Graincorp fell 1.0% to $10.46 despite announcing a record half-year result, as the war in Ukraine boosted demand for Australian commodities.

The company made $246 million in profit in the six months to March 31, nearly five times the amount it made a year ago.

In commodity markets, Brent crude oil rebounded 4.8% to US$107.39 a barrel. Iron ore rose 4.2% to US$133.50. Gold added 0.7% to US$1853.70.

In bond markets, the yield on the Australian 2 Year government bond slipped to 2.63% while the 10 Year eased to 3.50%.

The Australian dollar was buying 69.40 US cents as of 7.00am on Thursday, up from the previous close of 69.37. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies rose to 96.52.

Asia

Chinese stocks ended higher as traders digested PPI and CPI data releases. The figures showed demand-side inflationary pressure eased last month, UOB analysts say in a note, pointing to a moderation in core CPI. Though consumer inflation reached a five-month high in April, the scope of price increases looks modest from a global perspective, and is comfortably below China's annual target. The producer price index, a gauge of factory-gate inflation, rose 8% in April from a year earlier. The Shanghai Composite Index rose 0.8% to 3058.70, the Shenzhen Composite Index added 1.3% to 1918.52, while the ChiNext Price Index advanced 3.1% to 2346.15. Auto stocks were higher. BYD Co. advanced 8.3% and SAIC Motor gained 0.7%.

Hong Kong shares ended higher to snap a four-session losing streak, supported by auto and tech stocks. Meituan advanced 6.3% and Tencent Holdings was up 2.7%, but Alibaba Group slipped 0.4%. BYD Co. was the day's top gainer, rebounding 8.5% following yesterday's selloff, while Geely Auto rose 6.8%. Property developers were among the laggards. China Resources Land lost 3.2%, while China Overseas Land and Longfor Group shed 3.0% and 1.9%, respectively, after latest sales data showed declines. The benchmark Hang Seng Index gained 1.0% to 19824.57.

Japan's Nikkei Stock Average edged 0.2% higher to close at 26213.64, reversing earlier losses amid gains for US stock futures. "The optimism in the market is backed by the news that the Biden Administration could drop China tariffs," says AvaTrade's chief market analyst Naeem Aslam in an e-mail. Nippon Steel climbed 6.9% after posting a fiscal-year net profit compared with a net loss the previous fiscal year. Shimadzu added 5.4% after its fiscal-year net profit rose 31%.

Europe

The pan-European Stoxx Europe 600 index closed 1.7% higher at 427.59 as equities recovered further after recent losses. Data showing annual US inflation at a very high 8.3% in April failed to dampen sentiment as March's 8.5% looks to be the peak.

"Efforts to build a sustainable base for a rally continue in equities, as an initial drop in US futures following the monthly US CPI figure is reversed," IG's Chris Beauchamp said in a note.

Solid earnings helped sentiment, with Thyssenkrupp up 11.2% and Compass Group up 7.4% after results announcements, while Swedish Match jumped 9% after agreeing a takeover with Philip Morris. Germany's DAX ended up 2.2%, France's CAC 40 was up 2.5% and the UK's FTSE 100 rose 1.4%.

North America

Stocks fell on Wednesday after fresh data showed that inflation--though easing--remained higher than expected last month, feeding renewed apprehension about the Federal Reserve's likely response and extending a punishing stretch for equities.

The S&P 500 declined 1.6%. The Dow Jones Industrial Average fell 1%, while the technology-focused Nasdaq Composite was down 3.2%, its lowest close since November 2020. The day offered no relief for anxious stock investors, who have been bracing for the Fed to remove more of its economic support.

Trading was bumpy. The S&P 500 turned lower in the afternoon after spending much of the morning in the green, and its losses deepened as the closing bell neared. There is a long way to go before rising prices come back under control, investors and analysts warned, giving rise to volatility as financial conditions continue to tighten.

"The Band-Aid is still coming off slowly," said Michael Farr, the chief executive of investment advisory Farr, Miller & Washington. "According to the Fed, we're not near the end of this process that everyone wants over."

The consumer-price index increased 8.3% in April from the same month a year ago, data released Wednesday morning showed, decelerating from an 8.5% annual rate in March but above the 8.1% expected by economists. Lower annual inflation last month marks the first monthly easing of price increases since August 2021.

Volatile markets have been primed to react strongly to any headline hinting at persistent price pressures, said David Kotok, chief investment officer at Cumberland Advisors. "We're in those kinds of crazy times," he said.

The inflation data sent short- and long-term government-bond yields converging, which investors said signaled concerns about tighter monetary policy and growth. The yield on the two-year Treasury note--highly responsive to expected Fed tightening--rose to 2.629%, from 2.623% at Tuesday's settlement. The yield on the 10-year Treasury, meanwhile, declined to 2.918%, from 2.990% a day earlier. Bond yields fall as prices rise.

Riskier assets continued to suffer. Niche pharmaceutical companies were among the Nasdaq's biggest losers on the day, with larger tech firms such as Netflix and Facebook parent Meta Platforms both declining more than 4%. In the unpredictable world of cryptocurrency, bitcoin lost more ground and continued to trade more than 50% off of its all-time highs from last year.

"The bubble-type stocks will continue to unwind, and we're watching bitcoin closely," said Chris Senyek, chief investment strategist at Wolfe Research. Market losses in areas like those -- which have attracted throngs of retail investors over the last two years -- could dent spending in the real economy, he warned.

More speculative bets like investments in growth-oriented stocks and crypto have been slammed this year. Higher interest rates set by the Fed translate into greater returns on safe assets, dimming the appeal of far-off profits. The central bank last week lifted rates by half a percentage point, the biggest rise since 2000, and approved a plan to shrink its $9 trillion asset portfolio, kicking into a higher gear its campaign to rein in 40-year-high inflation.

Adding to the uncertainty for investors are the war in Ukraine, which has propelled inflation even higher by boosting commodity prices, and Covid-19 lockdowns in China that threaten to hurt the global economy.

"If we only had rising policy rates, or only had high inflation, or only had China or only had Ukraine, we could probably manage that," said Daniel Morris, chief market strategist at BNP Paribas Asset Management. "But we've got all that simultaneously. That's why it's such a particularly challenging environment."

Aoifinn Devitt, chief investment officer at investment advisory Moneta, said she has been guiding clients toward investments grounded in the real economy, such as in the energy and infrastructure sectors, because of those sectors' relative strength amid inflation. The selloff among tech stocks, she noted, has been "indiscriminate."

"It's probably a sign of fear that has entered the retail investor complex," Ms. Devitt said.

Riskier corners of the market got little comfort on Wednesday. Bitcoin's recent selloff, and a downbeat quarterly report Tuesday, contributed to declines for Coinbase Global. Its shares slid $19.27, or 26%, to $53.72 after the cryptocurrency exchange said its users declined from the previous quarter. Shares of Unity Software plunged $17.83, or 37%, to $30.30 after the videogaming software developer widened its loss and gave second-quarter revenue guidance below analysts' expectations.

Kohl's stock fell $2.74, or 5.6% to $46.65 as shareholders rejected an activist investor's push to replace up to 10 directors as the retailer is exploring a potential sale. Switch rose $2.79, or 9.1%, to $33.54 after the computer-services company said it was being taken private by a consortium of investors.

On the other hand, strong earnings reports from some companies drove gains. Shares of Electronic Arts rose $8.89, or 8%, to $120.49 after the videogame company said revenue in the latest fiscal year rose 24% to $6.99 billion. Doughnut chain Krispy Kreme logged a rise of 46 cents, or 3.8%, to $12.67 after reporting earlier Wednesday that net revenue jumped 16% year over year in the three months through March.

Oil prices climbed. Brent crude, the global benchmark, rose $5.05 a barrel, or 4.9%, to settle at $107.51 a barrel.