Australia

Australian shares are set to slide amid a retreat in risk appetite on Wall Street as growth warnings and an oil price jump rattled traders ahead of fresh data on US inflation due Friday.

ASX futures were down 54 points or 0.8% at 7079 as of 8.00am on Thursday, pointing to a fall at the open.

The bumpy ride continued on Wall Street, sending major indexes sinking through the midday hours after stocks opened the trading day close to flat. The S&P 500 fell 1.1%, and the blue-chip Dow Jones Industrial Average lost 0.8%. The technology-heavy Nasdaq Composite Index slipped 0.7%. Those moves, a turnaround from Tuesday's gains, extended the volatile holding pattern that has ensnared markets in recent weeks.

Investors' fixation earlier in 2022 on higher rates -- which reduce the relative value of companies' future profits -- has given way to deeper concerns about an economic slowdown, said T. Rowe Price capital-markets strategist Tim Murray. Between those twin fears, traders have had little time to catch their breath.

The World Bank on Tuesday cut its global growth forecast and warned that conditions in the economy resemble the stagflation of the 1970s. A day later the Organisation for Economic Cooperation and Development (OECD) similarly slashed growth expectations, citing the ongoing impact of Russia's war in Ukraine and covid lockdowns in China.

"Initially, consumers were grumbling about inflation but still spending, " Mr. Murray said. "Now we're getting to the point where it's causing them to stop spending."

Locally, the S&P/ASX 200 closed 0.4% higher at 7121.1 even as bank stocks declined after the RBA's bigger-than-expected rate increase a day earlier.

The financial sector, alongside property trusts, was the session's worst-performing sector, each falling 2.9% at the close.

The major banks ended between 2.3% and 6.1% lower, while regional lender Bendigo & Adelaide Bank was the worst-performing stock on the ASX 200, losing 7.2%.

Still, energy stocks soared, closing 4.2% higher. Paladin, Woodside and Santos finished 13.5%, 5.6% and 3.4% higher, respectively.

Boral's stock jumped 14.7% after the company said Vik Bansal will take the helm as CEO later this year.

Atlas Arteria was the session's top stock, rising 16.2% after IFM Global Infrastructure Fund said it had built a stake of around 15% in the toll-road owner.

In commodity markets, Brent crude oil rose 2.6% to US$123.75 a barrel. Iron ore slipped 0.2% to US$146.90. Gold increased 0.2% to US$1856.50.

Local bond markets stabilised after Wednesday’s selloff and the yield on Australian 2 Year government bonds edged down to 2.70% while the 10 Year slipped to 3.54%. In the US, the yield on 2 year Treasury notes rose to 2.77% and the yield on the 10 year US Treasury notes advanced to 3.02%.

The Australian dollar traded at 71.89 US cents, down from the previous close of 72.28 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 95.50.

Asia

Chinese shares ended higher amid growing expectations that the country's economy will continue reopening as Covid-19 curbs are lifted. That's brightening the demand outlook in the country, helping push energy stocks higher. PetroChina advanced 2.5% and China Oilfield Services added 2.1%. The Shanghai Composite Index rose 0.7% to 3263.79, the Shenzhen Composite Index closed 0.5% higher at 2083.42 and the ChiNext Price Index added 0.8% to 2576.34. Focus will likely be on China's upcoming trade data for May. Economists surveyed by The Wall Street Journal forecast a 8.0% on-year export growth for the month, which would be more than double the 3.9% increase reported in April. The General Administration of Customs will release the data Thursday.

Hong Kong's Hang Seng Index rose 2.9% to close at 20697.36 as tech stocks rebounded. In the wake of quarterly earnings and ADR movements overnight, Alibaba Group surged 12%--its biggest one-day percentage gain in almost a month--while Baidu jumped 14%. Peers JD.com, NetEase and Meituan rose 3.3%-5.6%. Chinese energy majors strengthened amid rising oil prices, with Cnooc up 3.4% and PetroChina climbing 2.2%. Among the laggards were Xinyi Solar and Haidilao, which fell 1.6% and 0.6%, respectively. The session's strong gains helped the benchmark index pare its weekly loss down to 0.1%.

Japanese stocks ended higher, led by gains in tech and real-estate shares, as concerns abate somewhat about the cost of borrowing. Medical-information-platform operator M3 gained 5.6% and Sumitomo Realty & Development climbed 4.5%. The Nikkei Stock Average rose 1.0% to 28234.29. The yield on the 10-year Japanese government bond declined half a basis point to 0.240%. Investors were focused on China's easing Covid-19 restrictions and the war in Ukraine--as well as their implications for crude oil prices and bond yields.

Europe

European stocks closed lower after the Organization for Economic Cooperation and Development became the latest international institution to downgrade its global economic growth forecast for this year. The Stoxx Europe 600 fell 0.6%, London’s FTSE slipped 0.1%, the German DAX declined 0.8% and the French CAC 40 shed 0.8%.

The OECD on Wednesday cut its 2022 global growth forecast 1.5 percentage points to 3%, noting the effects of the Ukraine war and China's coronavirus lockdowns.

"To have the risks to the global economy, particularly in Europe as well as the UK, spelt out so starkly, seems to have prompted increased anxiety amongst investors sending yields higher, and equity markets lower," CMC Markets analyst Michael Hewson writes.

North America

US stocks fell Wednesday as investors parsed an ambivalent outlook for the global economy and awaited key data about inflation.

Spring's bumpy ride continued, sending major indexes sinking through the midday hours after stocks opened the trading day close to flat. The S&P 500 fell 1.1%, and the blue-chip Dow Jones Industrial Average lost 0.8%. The technology-heavy Nasdaq Composite Index slipped 0.7%.

Those moves, a turnaround from Tuesday's gains, extended the volatile holding pattern that has ensnared markets in recent weeks.

Equities have rebounded from the May lows that came close to pushing the S&P 500 into a bear market, defined as a 20% fall from a recent high. But investors say sentiment remains fragile and many investors lack conviction in the rebound. At issue is whether the economy can skirt a recession as it faces rising interest rates and inflation that has remained high longer than many economists had been expecting.

Those factors have combined to weigh heavily on major indexes this year, with the S&P 500 down about 14% year to date. Investors' fixation earlier in 2022 on higher rates -- which reduce the relative value of companies' future profits -- has given way to deeper concerns about an economic slowdown, said T. Rowe Price capital-markets strategist Tim Murray. Between those twin fears, traders have had little time to catch their breath.

Recently, the combination of slowing growth and rising prices has raised the specter of stagflation -- when growth stalls but inflation drives up prices. The World Bank on Tuesday cut its global growth forecast and warned that conditions in the economy resemble the stagflation of the 1970s. In another sign of slowing economic activity, new data showed that a measure of US mortgage applications fell to its lowest level in 22 years last week, indicating a pullback in the blistering real-estate market.

"Initially, consumers were grumbling about inflation but still spending, " Mr. Murray said. "Now we're getting to the point where it's causing them to stop spending."

US consumer-price index data due Friday will be crucial, said Michael Arone, chief investment strategist at State Street Global Advisors. The data are expected to show inflation in the US held steady at 8.3% in May, on the year.

Some pandemic-era price surges, like the run up in used-car prices, have persisted even as the economy normalizes. "Are some of those aftershocks starting to get some relief?" Mr. Arone said, highlighting a question Friday's data could answer.

Treasury Secretary Janet Yellen appeared before lawmakers for a second day Wednesday, part of two days of testimony discussing the administration's annual budget request. On Wednesday, Ms. Yellen said the White House is looking into reconfiguring tariffs on Chinese imports as a way to ease inflation.

Western Digital fell $2.50, or 4.1%, to $57.82 after it confirmed reaching a settlement with activist investor Elliott Management that called for it to consider splitting its business. Campbell Soup Co. rose by 71 cents, or 1.5%, to $47.31 after it reported a rise in quarterly sales and lifted its sales guidance for the fiscal year.

Smartsheet fell $2.82, or 6.9%, to $37.76 after the software company reported a wider quarterly loss. Citrus farmer Limoneira rose $2.54, or 22%, to $13.91 after reporting better-than-expected profit.

As companies showed investors their first-quarter results over the past two months, profits generally held up, but with cause for concern lurking just below the surface, said Lisa Erickson, head of public markets at US Bank. Input costs, including wages, have crept higher, and some companies have signalled earnings will face pressure in the second half of the year.

"Those are items that do sound a note of caution for us," Ms. Erickson said.

On the other hand, stability in government-bond prices has helped stocks find their footing over the past month, after a sharp bond selloff and corresponding rise in yields to start the year cut into equity valuations. Higher yields on Treasury debt sweeten the appeal of a safer alternative to stocks.

On Wednesday, the yield on the 10-year Treasury note rose to 3.028%, up from 2.969% on Tuesday but below the high of 3.124% reached early last month. Bond yields and bond prices move in opposite directions.