Australia

Australian shares are set to jump as risk appetite returned to Wall Street amid strong retail results and greater certainty about the US Federal Reserve’s plans for interest rates hikes.

ASX futures were up 69 points or 1% at 7176 as of 8.00am AEST on Friday, pointing to a jump at the open.

Overseas, the Dow industrials gained 1.6%, off 11% from their January record. The S&P 500 advanced 2%. The tech-heavy Nasdaq Composite climbed 2.7%, helped by gains in shares of Apple, Microsoft, Amazon.com and Tesla.

Heartening reports from US retailers Macy's, Dollar General and Dollar Tree helped counter a gloomier view of retailers last week, when results from Walmart, Target and Kohl's raised concerns that rising costs are eroding profits.

"After having a real challenging time with retail last week, you're starting to see some other signs that not everybody in retail is doing poorly," said Wayne Wicker, chief investment officer at MissionSquare Retirement. "It probably provides a little more confidence that the consumer continues to be reasonably strong."

Fed meeting minutes released Wednesday showed that policy makers were in agreement for half-percentage point increases in June and July, in line with previous communication. Major stock indexes closed higher after the release.

"To some extent, markets have been reassured that the Fed isn't going to tighten more aggressively than what is expected," said Luc Filip, head of investments at SYZ Private Banking.

Locally, the S&P/ASX 200 closed 0.7% lower at 7105.9, weighed down by the heavyweight stocks that drove the previous session's gains.

Shares in 12 of the 13 largest companies by market cap lost ground amid economic concerns raised by data showing weaker-than-expected 1Q business investment.

Coalminers had a dismal day as the new Labor government talked up renewable energy, with Whitehaven falling 4.7%, Coronado dropping 5.6% and New Hope down 7.8% on a quarterly update.

An index of the 20 biggest companies slipped 0.9% amid losses among banks, miners and consumer staples. BHP, Rio Tinto and Fortescue fell 0.9%-3.7%, while Macquarie, NAB, ANZ and Commonwealth banks edged down 0.3%-0.7%.

Tech stocks pared losses. Appen surged 29% on a takeover proposal by Telus, while Block rose 1.2%.

The ASX 200 is down 0.6% so far this week.

In commodity markets, Brent crude oil rose 3.1% to US$117.61 a barrel. Iron ore declined 1.6% to US$131.25. Gold was flat at US$1853.90.

Local bond markets continued to rally. The yield on Australian 2 Year government bonds dropped to 2.34% while the 10 Year dipped to 3.20%. US bond markets closed mostly flat. The yield on US Treasury 2 Year notes declined to 2.49%, while the 10 Year steadied at 2.75%. Yields fall as prices rise.

The Australian dollar traded at 70.97 US cents as of 7.00am AEST, up from the previous close of 70.85 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies slipped to 94.53.

Asia

China stocks ended mixed, as the market withdrew from the previous day's gains to extend its range-bound trading pattern so far this week. Central China Securities analysts expect fluctuations to persist in the near term, but are confident of a broad recovery trend from current levels, as China's pandemic resurgence increasingly gets under control. The benchmark Shanghai Composite Index rose 0.5% to settle at 3123.11, while the Shenzhen Composite Index also added 0.5% to 1955.13. The tech-heavy ChiNext Price Index was the only loser, falling 0.2% to end at 2321.13. Medical services providers and medical equipment makers were among the top losers. The weakness was offset by gains in engineering companies and machinery suppliers.

Hong Kong's Hang Seng Index resumed this week's downtrend, ending 0.3% lower at 20116.20, as pharma and property stocks weighed. CSPC Pharma declined 5.1% after posting a lower 1Q profit, while Wuxi Biologics fell 5.0% and Alibaba Health lost 2.6%. Country Garden Services was the top laggard, skidding 5.7%, while Country Garden Holdings shed 2.7%. Among gainers, Lenovo Group added 1.1% following a 48% jump in 4Q profit. Within the Chinese tech sector, Meituan fell 0.7%, Tencent Holdings eked out a 0.1% gain and Alibaba Group slipped 1.5% ahead of its earnings.

Japanese stocks ended lower, dragged by falls in electronics stocks, as concerns continue about higher costs of operations owing to supply-chain disruptions. Advantest dropped 3.6% and Fanuc closed 2.2% lower. Meanwhile, Mitsubishi Electric shed 4.1% after it reported additional quality-control issues. The Nikkei Stock Average fell 0.3% to close at 26604.84.

Europe

European markets rose after upbeat retail results and a positive reaction to the US Federal Reserve's latest minutes. The pan-European Stoxx Europe 600 gained 0.7%, the French CAC 40 and German DAX were both up more than 1%.

"US stocks are rallying as investors viewed both the Fed's minutes as a commitment to only gradual tighten policy to fight inflation and after a few retailers provided optimistic outlooks," Oanda analyst Edward Moya says in a note. "The Fed locked itself into doing a couple of half-point rate increases until the Jackson Hole Symposium and that has removed the risk of aggressive short-term tightening."

London’s FTSE 100 ended Thursday up 0.67%, joining other global markets in a relief bounce--though questions remain over how long it can last.

"Another attempt at a relief rally is underway across equities, with a fairly substantial bounce across European and US markets coming in the wake of last night's Fed minutes," IG Group PLC's chief market analyst Chris Beauchamp says.

Those minutes didn't add much to monetary policy outlook but did calm fears over a fast pace of tightening being on the way, Mr. Beauchamp says. But beyond bargain hunting, there is little concrete rationale for the sudden recovery, which will leave investors wondering whether next week will see yet another dramatic reversal in fortunes, Mr. Beauchamp says.

North America

US stocks rose Thursday, and the Dow Jones Industrial Average notched a fifth consecutive day higher, after strong results from retailers lifted sentiment across the market.

Heartening reports from Macy's, Dollar General and Dollar Tree helped counter a gloomier view of retailers last week, when results from Walmart, Target and Kohl's raised concerns that rising costs are eroding profits.

"After having a real challenging time with retail last week, you're starting to see some other signs that not everybody in retail is doing poorly," said Wayne Wicker, chief investment officer at MissionSquare Retirement. "It probably provides a little more confidence that the consumer continues to be reasonably strong."

The Dow industrials gained 1.6%, off 11% from their January record. The S&P 500 advanced 2%. The tech-heavy Nasdaq Composite climbed 2.7%, helped by gains in shares of Apple, Microsoft, Amazon.com and Tesla.

Equity investors have endured a particularly volatile period lately. At the end of last week the S&P 500 fell far enough that it was on track to close at least 20% below its January peak. The benchmark then reversed course to avoid closing in bear market territory.

Despite the advances by major indexes this week, many investors expect markets to remain unsettled for some time to come.

"I think we're going to still go through some more volatility ahead," said Leslie Thompson, chief investment officer at Spectrum Wealth Management.

Investors have been considering how the Federal Reserve's plans to tighten monetary policy could weigh on economic growth and the performance of financial markets.

Fed meeting minutes released Wednesday showed that policy makers were in agreement for half-percentage point increases in June and July, in line with previous communication. Major stock indexes closed higher after the release.

"To some extent, markets have been reassured that the Fed isn't going to tighten more aggressively than what is expected," said Luc Filip, head of investments at SYZ Private Banking.

Money managers are closely watching fresh data as they gauge the health of the economy. On Thursday a second reading of first-quarter US gross domestic product came in worse than the first with a contraction at an annual rate of 1.5%.

"Economic data has come in weaker than expected lately. We do see this tightening in the economy. How severe the growth slowdown is what markets are thinking about now," said Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management.

Initial jobless claims fell last week and hovered near historic lows, suggesting a mixed economic picture.

Earnings reports continued to drive moves in individual stocks. Analysts have been scrutinizing results for indications that inflation has begun to weigh on profits.

"We are focusing on earnings and profitability. A lot of stable companies are reporting lower guidance," Mr. Ramjee said. "Even the tech sector is not immune to margin pressure, especially from input costs like wages."

Shares of Williams-Sonoma jumped $15.02, or 13%, to $130 after the retailer posted profits that beat analysts' expectations. Macy's shares climbed $3.71, or 19%, to $22.92 after the department-store chain reported robust sales growth and lifted its earnings guidance.

Dollar Tree shares advanced $29.21, or 22%, to $162.80 and Dollar General shares rose $26.79, or 14%, to $222.13 after the discount retail chains beat Wall Street's earnings expectations. It was the best one-day gain on record for both stocks, according to Dow Jones Market Data.

Nvidia shares rose $8.76, or 5.2%, to $178.51 after the chip maker posted record revenue, though its sales outlook for the current quarter came in below Wall Street's estimates.

Shares of VMware added $3.82, or 3.2%, to $124.36 after Broadcom confirmed that it will acquire the cloud computing firm for $61 billion in cash and stock. Broadcom shares rose $19.03, or 3.6%, to $550.66.