Australia

Australian shares are set to rise following strength in New York as investors snapped up technology stocks and Federal Reserve chairman Jerome Powell pledged action on inflation.

ASX futures were up 63 points or 0.9% at 7356 as of 8.00 am AEST, suggesting a positive start to trading.

US stocks rose Tuesday, led by a rebound in shares of technology companies, as Federal Reserve Chairman Jerome Powell reiterated the central bank's efforts to corral inflation.

Stocks opened lower and dipped further as senators peppered Mr. Powell with questions during his reconfirmation hearing for a second term as Fed chair. Indexes later recovered.

The S&P 500 added 0.9%, snapping a five-day losing streak. The Nasdaq Composite added 1.4%, building on Monday's midday turnaround. The Dow Jones Industrial Average advanced 0.5%.

During the hearing, Mr. Powell said the central bank plans to move as aggressively as needed to cool inflation. "If we have to raise interest rates more over time, we will," he told lawmakers.

Locally, the S&P/ASX 200 closed 0.8% lower at 7390.1, with losses in every sector. Consumer staples was the worst performing sector, slumping 2.1% after Inghams warned of lower production and sales due to Covid-driven staff absences.

Shares in the chicken producer dropped 5.95%, while shares in Metcash, Woolworths and Coles—all of which are Inghams customers—gave up between 2.1% and 2.5% amid concern over supply issues.

The heavyweight financial sector slipped 1.0% as big banks NAB, Westpac, ANZ and Commonwealth fell by between 0.5% and 1.5%.

Medical device manufacturer Polynovo was the best performing ASX 200 component, surging 25% after posting record 2Q sales.

ABS data released Tuesday showed a record 7.3% jump in Australian retail sales in November versus October. The increase follows a gain of 4.9% in October. Some claim a slowdown in December and January sales is likely due to Omicron.

Overseas, the Stoxx Europe 600 rose 0.8%, led by gains for its tech sector. Deutsche Bank fell 1.5% and Commerzbank declined nearly 5% after the Wall Street Journal reported that Cerberus Capital Management was selling more than 20 million shares of each company.

In Asia, stock markets were mostly lower. Japan's Nikkei 225 fell 0.9%, while Hong Kong's Hang Seng Index was flat. In mainland China, the Shanghai Composite Index dropped 0.7%.

Turning to commodities, gold futures rose 1.3% to $US1800.70 an ounce; Brent crude rallied 3.5% to $US83.72 a barrel; Iron ore added 2.5% to US$128.60 a tonne.

Bond markets recovered slightly after days of selling. The yield on the Australian 10-year bond eased down to 1.89%, while the US 10-year Treasury slipped to 1.74%. Yields move inversely to price.

The Australian dollar was buying 72.06 US cents near 8.00am AEST, up from the previous close of 71.72. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, slipped to 89.56.

Asia

Chinese shares closed lower, weighed by auto and energy stocks. The Shanghai Composite Index ended 0.7% lower, the Shenzhen Composite Index fell 1.1% and the ChiNext Price Index declined 1.3%. Auto stocks were among the worst performers amid Omicron worries. Great Wall Motor lost 5.9%, SAIC Motor shed 2.1% and BYD Co. fell 2.9%. Among energy stocks, PetroChina slipped 1.1% and China Coal Energy was off 1.2%.

"With China showing no signs of opening the stimulus floodgates, swirling virus nerves and property sector concerns, local markets are struggling to maintain any sort of upward momentum," Oanda says.

Hong Kong stocks ended the session little changed, as a rebound in Chinese property developers was offset by weakness in consumer stocks. The benchmark Hang Seng Index edged down 7.48 points to 23739.06, snapping a three-session rally. Chinese real-estate companies staged a slight recovery even as the sector's uncertainties persist. Country Garden Services rose 4.0% and China Overseas Land & Investment added 3.4%. But consumer-goods makers weighed on the market, as China Resources Beer fell 3.8% and Geely Auto lost 3.6% amid supply chain concerns due to chip shortages and Covid outbreaks in China.

Japanese stocks finished lower, dragged by electronics stocks, amid continued uncertainty about the Omicron variant and the Japanese government's countermeasures. Concerns about reduction of policy stimulus from global central banks are also weighing on the market. Sensor company Keyence falls 7.9% and Lasertec drops 4.6%. The Nikkei Stock Average falls 0.9%. The government said Tuesday it would extend its near-total ban on foreigners entering the country until at least the end of February.

Europe

European stocks rise as US equities also trade higher with the focus on Federal Reserve Chair Jerome Powell's testimony before the Senate Banking Committee. The pan-European Stoxx Europe 600 added 0.8%.

IG market analyst Chris Beauchamp says, "continued loose policy outlook on this side of the Atlantic mean that the cheaper European equity complex finally begins to command the attention of global investors." Powell says he expects high inflation to last "well into the middle of the year," and the Fed could raise rates more over time if price pressures persist longer than expected.

In London, the FTSE 100 climbed 0.6% driven by sectors such as healthcare, retail and oil. "European markets have enjoyed a much better session today, although the bias has been much more defensive in nature with healthcare stocks outperforming," Michael Hewson from CMC Markets said.

Dechra Pharmaceuticals jumped 3.4%, AstraZeneca rose 1.7% and GlaxoSmithKline increased 1.3%. Retailers such as Next and JD Sports were also on the rise after the BRC published UK retail sales figures for December. In addition, shares in oil majors BP and Shell increased 1.8% and 1.6% respectively.

North America

US stocks rose Tuesday, led by a rebound in shares of technology companies, as Federal Reserve Chairman Jerome Powell reiterated the central bank's efforts to corral inflation.

Stocks opened lower and dipped further as senators peppered Mr. Powell with questions during his reconfirmation hearing for a second term as Fed chair. Indexes later recovered.

The S&P 500 added 0.9%, snapping a five-day losing streak. The Nasdaq Composite added 1.4%, building on Monday's midday turnaround. The Dow Jones Industrial Average advanced 0.5%.

During the hearing, Mr. Powell said the central bank plans to move as aggressively as needed to cool inflation. "If we have to raise interest rates more over time, we will," he told lawmakers.

The bank has made no decisions about shrinking its balance sheet, he added, saying also that "it's a long road to normal" for monetary policy.

Stocks have been volatile as the prospect of imminent and faster-than-expected interest-rate rises has convulsed financial markets this month. Mr. Powell on Tuesday played up the central bank's role in taming inflation, while reiterating that interest rates are likely to remain at historically low levels.

He added that he was optimistic that supply-chain bottlenecks would ease this year to help bring down inflation.

"Historically, stocks perform well in the months leading up the first rate hike of a cycle," said Mark Haefele, chief investment officer of global wealth management at UBS Group, in a note to clients Tuesday. He added that since 1983, the S&P 500 has risen an average of 5.3% in the first three months before the first Fed rate increase, followed by an average of 5.3% over the next six months.

Still, investors remained jittery as stock indexes stayed volatile.

"There is more of a risk now that rate rises are going to coincide with falling growth, and that is obviously a bad combination," said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe.

During the hearing, investors bought the dip on tech and other growth stocks. The tech and consumer discretionary sectors of the S&P 500 both rose recently about 1%, after trading in the red earlier in the session. Communication services stocks added 0.8%.

Amazon.com rose 2.4%. Facebook parent Meta Platforms and Apple added more than 1%.

Energy stocks climbed, coinciding with a rise in oil prices.

Other stocks making big individual moves included Illumina, which added 17% after posting earnings late Monday that beat analysts' expectations. Shares of Rivian Automotive added 2.6%, recouping some of the more-than-5% drop Monday when The Wall Street Journal reported that the electric-truck maker's chief operating officer had departed. Albertsons fell 9.8%, despite the grocery chain reporting higher quarterly sales.

A rally in government bond yields halted a day after the 10-year Treasury yield settled at a 52-week high. The yield on the benchmark bond edged down to 1.745% Tuesday from 1.779% Monday.

Investors also are gearing up for the start of earnings season this week. The reports will be particularly important for technology firms which will need to post strong growth to justify their valuations, said Mr. Kassam.

Results more broadly will need to be robust to support US stocks, which are increasingly looking less attractive than their European counterparts, he added. "For the US to keep its top-of-the-world stance it needs across the board earnings to come in strong."

Reports later in the week will be dominated by financial firms, with BlackRock, Citigroup, JPMorgan Chase and Wells Fargo set to report Friday.