Australia

Australian shares are set to rise after stocks advanced and bond yields dipped on Wall Street as traders weighed the possibility central banks slow rate hikes in the face of a decelerating economy.

ASX futures were up 96 points or 1.5% at 6545 as of 8.00am on Monday, pointing to a jump at the open.

A day after closing out the index's worst first half of any year since 1970, the S&P 500 on Friday clawed its way into the green after early losses but still finished the week down 2.2%. It has now fallen for 11 of the past 13 weeks. The S&P 500 gained 1.1%. The tech-focused Nasdaq Composite Index rose 0.9%. The Dow Jones Industrial Average climbed 1%.

Government-bond yields slumped, continuing a retreat from mid-June highs, as traders considered whether the Federal Reserve might ease away from its aggressive path of interest-rate increases in the months ahead.

The fall in US Treasury bond yields is a pivot point for investors' outlooks, said Roger Aliaga-Diaz, chief economist for the Americas at Vanguard. Traders favour Treasury bonds for their ultrasafe returns in the face of economic distress, but sell them when rising prices augur higher benchmark interest rates set by the Fed. A bond's yield falls as its price rises.

"For much of this year, Treasury yields went up very quickly as the Fed was responding to inflation concerns," Mr. Aliaga-Diaz said. "I suspect that has started impacting the growth of the economy."

Locally, the S&P/ASX 200 closed 0.4% lower at 6539.9, giving away early gains to finish down for the week.

The benchmark index was up by 0.9% before fading amid losses by commodity stocks. Shares of gold miners rose but iron-ore heavyweights Rio Tinto, BHP and Fortescue fell by between 2.3% and 4.1%.

Some lithium stocks were also weak, with Liontown falling 5.2% as it gave back yet more of its gains from early in the week.

The energy sector fell by 3.5%. Most other sectors rose, with the financials edging 0.1% higher on gains by wealth managers.

The ASX 200, which is coming off its worst month and quarter since March 2020, lost 0.6% for the week.

In commodity markets, Brent crude oil edged down 0.04% to US$111.60. Iron ore declined 4.3% to US$113.90. Gold futures were down 0.6% at US$1811.60.

Bonds continued to rally amid concerns about decelerating growth and the yield on Australian 2 Year government bonds dipped to 2.44% while the 10 Year declined to 3.59%. Overseas, the yield on 2 Year US Treasury notes slipped to 2.83% and the yield on the 10 Year US Treasury notes lost ground to 2.88%. Yields fall when prices rise.

The Australian dollar fell to 68.13 US cents, down from 69.01 at the previous close. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 97.70.

Asia

China stocks ended lower amid the latest signs of rising Sino-US tensions after the US government blacklisted five Chinese companies for allegedly helping Russia's military, while NATO's latest security concept for the first time singled out China. The benchmark Shanghai Composite Index fell 0.3% to settle at 3387.64, while the Shenzhen Composite Index was down 0.2% at 2219.41. The tech-heavy ChiNext Price Index was the worst performer, falling 1.0% to 2781.94. Travel companies including tourism agencies, hotel operators and aviation firms led losses, as the industry pulled back from soaring gains in recent sessions, after officials on Tuesday cut Covid-19 quarantine requirements for inbound travellers from overseas and loosened domestic pandemic monitoring rules.

Hong Kong share markets were closed for a public holiday.

Japanese stocks ended lower, dragged by falls in energy and auto stocks amid persisting concerns about operation costs and the economic outlook. Oil explorer Inpex dropped 4.1% and Subaru Corp. fell 5.1%. Mitsui & Co. lost 5.5% and Mitsubishi Corp. shed 5.4% after reports that Russia will replace the Sakhalin-2 project operator. The Nikkei Stock Average fell 1.7% to 25935.62. Investors remain focused on the Russia-Ukraine war and its implications for global trade and monetary policy.

Europe

European stocks closed mostly flat in the new financial year’s first day of trading. The pan-European Stoxx 600 closed down 0.02% to end the week 1.4% lower. Germany’s Dax closed 0.2% higher and France’s CAC rose 0.14% on Friday.

London’s FTSE 100 ended the day broadly flat as inflation and growth concerns continued to linger, IG analysts say in a note.

"Once more, inflation and growth fears predominate, as growth forecasts are cut and expectations of a recession become stronger," the IG analysts say.

Mondi completed the disposal of its Personal Care Components business ahead of schedule to Nitto Denko Corp. for EUR615 million.

Elsewhere, BT Group secured the rights to broadcast the majority of UEFA Champions League soccer matches for a further three seasons, but it did have its exclusivity broken as Amazon moved into the space by securing its own package of games.

North America

Bond yields sank and stocks recovered a fraction of their weekly losses on Friday, kicking off the back half of a year that more investors fear could be marred by a slowing economy.

A day after closing out the index's worst first half of any year since 1970, the S&P 500 on Friday clawed its way into the green after early losses but still finished the week down 2.2%. It has now fallen for 11 of the past 13 weeks. The S&P 500 gained 1.1%. The tech-focused Nasdaq Composite Index rose 0.9%. The Dow Jones Industrial Average climbed 1%.

Government-bond yields slumped, continuing a retreat from mid-June highs, as traders considered whether the Federal Reserve might ease away from its aggressive path of interest-rate increases in the months ahead.

The fall in Treasury yields is a pivot point for investors' outlooks, said Roger Aliaga-Diaz, chief economist for the Americas at Vanguard. Traders favour Treasury bonds for their ultrasafe returns in the face of economic distress, but sell them when rising prices augur higher benchmark interest rates set by the Fed. A bond's yield falls as its price rises.

"For much of this year, Treasury yields went up very quickly as the Fed was responding to inflation concerns," Mr. Aliaga-Diaz said. "I suspect that has started impacting the growth of the economy."

Still, investors have carried a risk-averse mood into the summer. On a shortened day for bond trading ahead of the holiday weekend, the yield on the 10-year Treasury note fell to 2.901% from 2.973%. On June 14, it had peaked near 3.5%. US markets will be closed Monday for the Fourth of July.

Panic-resistant stocks such as utilities and consumer staples ended the week ahead, while tech companies and consumer-discretionary businesses led the week's losses.

"When we see defensive sectors outperforming more economically sensitive sectors, that tends to tell us that investors are focused on the growing risk of a recession relative to a soft landing," said Joshua Jamner of ClearBridge Investments.

Even as growth slows, investors remain wary of persistent inflation, which has forced central banks to reverse years of easy-money policies and accelerate interest-rate increases. That has created challenging conditions for markets, because fast-rising prices make it harder for Fed officials to soothe growth concerns with looser monetary policy. Central-bank officials world-wide have signalled that they are more concerned about taming inflation than an economic slowdown.

"If the inflation fever begins to break a little bit here, it would give the Fed more breathing room," said Jurrien Timmer, director of global macro at Fidelity Investments. "That could be enough to calm the economy down without causing much collateral damage."

Earlier Friday, markets swung lower after the Institute for Supply Management's report on US factories showed that manufacturing activity decelerated in June. Data released this week showed US household spending slowed in May.

"We can see the foundations are being set for a recession," said Seema Shah, chief strategist at Principal Global Investors. She expects to see a recession at the start of next year if the labour market weakens. Fresh employment data is due July 8.

The war in Ukraine and uncertainty over the pace of future oil production make it difficult to assess the path for inflation and the prospect of recession, she said.

Elevated energy prices have been a key component of higher inflation. Brent crude, the international benchmark for oil prices, rose $2.60 on Friday, or 2.4% to $111.63 a barrel.

Anxiety has also entered corporate-bond markets. The premiums investors demand to hold the debt of highly rated companies instead of Treasury bonds have now risen to their highest level since the first months of the Covid-19 pandemic in 2020, according to Bloomberg index data.

Interest-rate volatility has slowed new bond sales. Investment-grade companies issued about $68 billion of new bonds last month, the smallest June total in nine years, according to BMO Capital Markets analysts.

With the S&P 500 in a bear market, defined as a 20% fall from a recent high, stock investors have been weighing how individual companies will fare amid the cloudy outlook for the second half of 2022. Midway through this month, a parade of big businesses will begin unveiling their second-quarter financial results, giving investors a look at recent performance.

Micron Technology shares fell $1.63, or 3%, to $53.65 on Friday after the memory-chip maker issued a subdued revenue outlook, spooking investors even as it reported a strong rise in earnings for its latest quarter. Shares of Kohl's fell $7.01, or 20%, to $28.68 after the retailer said that takeover talks with Franchise Group ended without a deal.

General Motors stock climbed 43 cents, or 1.4%, to $32.19 after the auto maker stood by its full-year guidance, despite warning that production challenges will weigh on second-quarter results. GM said that about 95,000 vehicles were built without certain semiconductors due to global shortages and can't be shipped to dealers yet.

Bitcoin, the world's largest cryptocurrency by market value, continued to trade below $20,000 as concerns about the safety of digital assets persisted. Bitcoin's price had surpassed $60,000 at its peak last November.