Australia

Australian shares are for a modest fall at the open after the US equity rally stalled and left the S&P 500 flat for the month of May.

ASX futures were down 26 points or 0.4% at 7186 as of 8.00am on Wednesday, pointing to a dip at the open.

Overseas, the S&P 500 lost 0.6%, resuming a downward trajectory after it snapped a seven-week losing streak last week. The Dow Jones Industrial Average fell 0.7%. Both the S&P and the Dow ended the month roughly flat. The Nasdaq Composite declined 0.4%. The technology-heavy index dropped 2.1% in May.

Tuesday's session capped another volatile trading month, during which stocks around the world swung wildly as traders tried to assess the outlook for global economies. In the US, stocks tumbled shortly after May began and continued falling amid a slew of earnings and economic data that came in worse than expected. Fresh data on growth and inflation as well as upbeat results from major US retailers helped global stocks pare the month’s losses.

"There's a bit of market uncertainty just about the pretty rapid rally we've had, and whether that can be sustained in a world where inflation is clearly still a factor," said Brooks Macdonald Chief Investment Officer Edward Park.

Locally, the S&P/ASX 200 closed 1.0% lower at 7211.1, pausing its recent rally amid widespread losses.

Financial and tech stocks led the decline as the benchmark index slipped following a 2.5% gain across the prior two sessions. All 11 sectors fell.

Banks Westpac, NAB, Commonwealth and ANZ gave up between 1.45% and 2.8% amid warnings from the head of Australia's prudential regulator that some mortgage borrowers would be stressed by higher interest rates.

Insurers QBE, IAG and Suncorp fell by between 2.3% and 6.35% as wild winds damaged property in Australia's southeast. The tech sector shed 1.9%.

AGL Energy edged 0.5% higher, steadying from Monday's 1.7% fall on the end of its demerger plans.

In commodity markets, Brent crude oil rose 1.0% to US$122.84 a barrel, continuing its climb as the Eurozone passed a partial ban on Russian oil. Iron ore fell US10 cents to US$136.50. Gold was down 0.5% at US$1839.50.

Local bond markets dipped sharply and the yield on Australian 2 Year government bonds rose to 2.43% while the 10 Year jumped to 3.35%. With trading resuming following the Memorial Day holiday, the yield on US 2 year Treasury notes rose to 2.55% and the yield on the US Treasury 10 year notes increased to 2.84%.

The Australian dollar traded at 71.76 US cents as of 7.00am, down from the previous close of 71.94 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies advanced to 94.47.

Asia

Chinese stocks ended the session higher, after Shanghai officials said today that the city will enter a new phase of comprehensive reopening from June 1. The benchmark Shanghai Composite Index rose 1.2% to settle at 3186.43, while the Shenzhen Composite Index added 1.6% to 2006.95. The tech-heavy ChiNext Price Index was the top performer, ending 2.3% higher at 2405.08. The market opened flat and had tracked lower in early morning, but turned positive before midday following news of Shanghai's plans to further resume production and activities. Electronics, consumer-goods, renewable-energy and home-appliance sectors led gains.

Hong Kong stocks ended the session higher, tracking gains in the Chinese market as investors welcomed Shanghai officials' plans to further reopen the city from a monthslong lockdown. The benchmark Hang Seng Index added 1.4% to settle at 21415.20, bringing the index's total gains in May to 1.5%. The market turned positive just before noon, after China's state media outlets reported that Shanghai will enter a new phase of comprehensive reopening from June 1. Consumer-goods sectors led gains. Haidilao jumped 6.3%, Meituan was up 6.8% and Li Ning rose 4.7%.

Japanese stocks ended lower, dragged by falls in real-estate stocks as recent gains in crude-oil prices rekindle concerns about higher costs of fuel and borrowing. Sumitomo Realty & Development dropped 3.7% and Daiwa House Industry lost 2.9%. Meanwhile, oil explorer Inpex jumped 6.2%. The Nikkei Stock Average fell 0.3% to 27279.80.

Europe

European markets mostly fell after record eurozone inflation data and a lower start to trading on Wall Street. The pan-European Stoxx Europe 600 dropped 0.5% and the French CAC 40 and German DAX retreated more than 1%.

Eurozone inflation hit 8.1% in the year to May, the highest level since record keeping began in 1997. Soaring prices for energy and food drove the jump as disruptions from the Russia and Ukraine conflict continued to roil commodity markets.

"The data from Germany and Spain meant the risks were heavily tilted to the upside and that's how it materialized," Oanda analyst Craig Erlam writes. "Yields across the euro area are higher again as investors continue to price in a more aggressive pace of tightening."

London’s FTSE 100 slipped 0.1% on Tuesday, as convenience retailer B&M plunged and oil majors surrendered gains towards the end of the session. B&M was the blue-chip index's worst performer on Tuesday, with shares falling 15% after it reported results for the year ended March 26. B&M is simultaneously losing the tailwind it had during the pandemic when its shops remained open, and its value-based proposition means margins are skinny and vulnerable to inflation, Russ Mould from AJ Bell says in a note.

North America

US stocks fell on Tuesday, ending the month on a downbeat note after last week's rally.

The S&P 500 lost 0.6%, resuming a downward trajectory after it snapped a seven-week losing streak last week. The Dow Jones Industrial Average fell 0.7%. Both the S&P and the Dow were roughly flat for the month. The Nasdaq Composite declined 0.4%. The technology-heavy index dropped 2.1% in May.

Tuesday's session capped another volatile trading month, during which stocks around the world swung wildly as traders tried to assess the outlook for global economies. In the US, stocks tumbled shortly after May began and continued falling amid a slew of earnings and economic data that came in worse than expected.

Throughout the month, profit warnings from companies ranging from Snap to Target to Walmart intensified worries about the lingering impact of inflation, and spurred investors to dump shares across several industries.

By mid-May, it seemed the S&P 500 was bound to close in a bear market, defined as a drop of 20% or more from a recent high, before a late-month rally sent stocks higher. The S&P 500 ended the month down about 14% from its January high.

Professional and individual investors alike waded into last week's rally in the US markets, finding opportunities to scoop up stocks that have seen their valuations fall. However, the underlying problems that battered stocks earlier this month have yet to abate.

Many traders remain worried that the Federal Reserve's plans to raise interest rates aggressively could tip the US economy into a recession. Meanwhile, concerns about an economic slowdown in China and sustained supply-chain disruptions due to the pandemic and the war in Ukraine have continued to weigh on investors' minds.

"There's a bit of market uncertainty just about the pretty rapid rally we've had, and whether that can be sustained in a world where inflation is clearly still a factor," said Brooks Macdonald Chief Investment Officer Edward Park.

New survey data released Tuesday showed US consumer confidence declined slightly in May from the previous months.

Crude prices jumped after European Union leaders said they would impose an oil embargo on Russia over its invasion of Ukraine, but later pared their gains. Front-month futures for Brent crude, the global benchmark, rose 1% to $122.84 a barrel, their highest settle since March. West Texas Intermediate, the US marker, slipped 0.3% to $114.67 a barrel.

The EU sanctions are set to include a ban on insuring ships that carry Russian oil, The Wall Street Journal reported. They would include an exemption for oil delivered from Russia via pipelines, which make up one-third of EU oil purchases from Russia. Meanwhile, some OPEC members are considering redrawing an oil-production deal to exempt Russia, the Journal reported, which could allow the rest of the organization to boost output.

US-traded shares of Unilever surged $4.35, or 9.9%, to $48.33 after the consumer-goods company said it would add activist investor Nelson Peltz to its board and disclosed his fund now holds a 1.5% stake.

The S&P 500's energy sector finished May with the largest gain among the benchmark index's 11 groups, extending a trend that has flourished for much of 2022. Some beaten-down stocks ended the month with gains, such as Netflix, Robinhood Markets and Zoom Video Communications, as investors took advantage of the selloff to hunt for bargains.

"When the S&P 500 is [close to entering] a bear market, that has a big psychological impact on those seeking value," said Craig Erlam, senior market analyst at Oanda. "I think the question repeatedly being asked is, 'Are we seeing a bottom in the markets?'"

In the bond market, the yield on 10-year Treasury notes rose to 2.842% from 2.748% Friday. Bond yields and prices move in opposite directions.