Australia

Australian shares are set to edge lower after the rally on Wall Street fizzled on Thursday.

ASX futures were down 20 points or 0.23% at 6946 as of 8:00am on Friday, pointing to a slip at the open.

US stocks ran out of steam Thursday, giving up gains despite additional data suggesting that inflation might be peaking.

The S&P 500 fell 2.97 points, or 0.1%, to 4207.27, while the tech-focused Nasdaq Composite Index lost 74.89 points, or 0.6%, to 12779.91. The Dow Jones Industrial Average rose 27.16 points, or 0.1%, to 33336.67.

All three indexes rose earlier in the day. Producer-price data buoyed investors' hopes that inflation may be easing, potentially slowing the Federal Reserve's pace of interest-rate increases.

In commodity markets, Brent crude oil was up 2.14% to $US99.48 a barrel, gold edged down 0.31% to US$1,786.81.

In local bond markets, the yield on Australian 2 Year government bonds was at 2.76% while the 10 Year was at 3.28%. Overseas, the yield on 2 Year US Treasury notes rose to 3.23% and the yield on the 10 Year US Treasury notes ticked up to 2.89%.

The Australian dollar hit 70.95 US cents up from the previous close of 70.78 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other was at 97.07.

Asia

Chinese shares resumed an uptrend after yesterday's losses, with nonbank financials and electronics leading the gains. The country's central bank said Wednesday it would step up support for the economy by reiterating existing measures. The A-shares look compelling in 2H, given likely low financing costs and some scope for earnings to surprise positively, said Michelle Qi, an Eastspring China analyst, in a note. China Life Insurance advanced 5.8% and East Money Information jumped 7.8%, while Luxshare Precision surged 10%. The Shanghai Composite Index added 1.6% to 3281.67, the Shenzhen Composite Index climbed 1.7% and the ChiNext Price Index closed 2.4% higher.

 Hong Kong's Hang Seng Index extended early gains to end 2.4% higher at 20082.43, tracking Wall Street's overnight rally amid hopes that the U.S. Fed could slow down the pace of rate increases. Consumer stocks led gains. Sportswear company Li Ning advanced 7.1%, garment maker Shenzhou International gained 7.5% and Anta Sports Products added 5.7%. Conglomerate Swire Pacific surged 10% after it swung to 1H net profit and said it plans to buy back shares. Techtronic Industries ended 11% higher after posting a rise in 1H net profit in a late Wednesday filing.

Japan's Nikkei Stock Average fell 0.65% to close at 27819.33, tracking losses in most regional equity markets. Today's focus revolves around the question as to whether U.S. CPI is near a peak, as markets gear up for the possibility of a significant move in the event of a miss either side of the headline number, says Michael Hewson, chief market analyst at CMC Markets in an email. The Nikkei's losses were led by electronics-related companies such as Fujitsu, losing 3.8%, Renesas Electronics, losing 3.7% and Advantest, shedding 3.6%. USD/JPY is at 134.98, compared with 135.00 as of Tuesday's Tokyo stock market close. The 10-year Japanese government bond yield is up 3 bps at 0.190%.

Europe

European stocks were mixed on Thursday. The pan-European Stoxx Europe 600 gained 0.4%, the German DAX was down by 0.05%, while the French CAC 40 added 0.3%.

London’s FTSE 100 closed down 0.5% on Thursday as weakening inflation readings once again helped U.S. markets.

"A swathe of ex-dividends on the FTSE 100 has meant that the index has been left behind as Wall Street moves higher once again. In addition, a continued wave of selling in the U.S. dollar has meant that the risk-on moves have extended into currency markets, boosting sterling and the euro and hobbling European markets," says Chris Beauchamp, chief market analyst at online trading platform IG.

Drugmakers GSK and Haleon were the days biggest fallers on the FTSE 100--closing down 10% and 4.9% respectively--after concerns over Zantac heartburn medication litigation.

North America

Stocks have rallied sharply from their trough in mid-June. The Nasdaq Composite on Wednesday closed up more than 20% from its low, kicking off a new bull market, though it remains down 18% year-to-date. The Russell 2000, an index of small-company stocks, flirted with the same milestone Thursday, before pulling back.

Energy stocks were Thursday's biggest gainers in the S&P 500, a familiar pattern for much of the year. Devon Energy, Marathon Oil and Schlumberger all climbed more than 5%. The consumer discretionary and tech segments, two groups that have outperformed in recent weeks, were the biggest decliners.

Inflation has been a key focus for both investors and the Fed this year. Central-bank officials have increased interest rates in recent months, raising borrowing costs, to slow demand and stabilize prices. Fed Chairman Jerome Powell has repeatedly said he is more concerned about the risk of failing to stamp out high inflation than about the possibility of raising rates too high and pushing the economy into a recession.

Money managers are hoping that the easing inflation data for July will be the start of a trend, though the path of inflation will be affected by the Ukraine war and nations' responses to Covid-19. Fresh data Thursday bolstered those hopes, showing that prices paid by US suppliers fell in July from the prior month. The Labor Department said Wednesday that the pace of consumer-price increases slowed in July.

"Inflation data is the really key determinant of market sentiment. Depending on how you cut the data, you can start to sell a more positive or negative story," said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald. While inflation data released Wednesday showed energy prices dropped, other goods and services still showed signs of elevation, he said.

Still, some investors are hoping that the inflation figures reduce pressure on the Fed to raise rates aggressively in the months ahead. Employers have been adding hundreds of thousands of jobs each month, and Mr. Powell last month dismissed worries that the US economy is in a recession, even after the Fed raised rates.

Investors have also worried that aggressive rate increases could weigh on the US economy. Recent hiring data have shown businesses are adding jobs, but investors are also assessing the rate of layoffs. Data released Thursday showed that 262,000 Americans filed for unemployment insurance in the week ended Aug. 6, up from 248,000 the week prior.