Australia

Australian shares are poised to edge lower after Wall Street pared losses and ended mixed as investors pulled the S&P 500 back from the brink of a bear market.

ASX futures were down 5 points or 0.1% at 6911 as of 8.00am on Friday, having slipped from modest gains hours earlier.

The S&P 500 declined 0.1%, reversing losses that had seen the benchmark 30 points from bear market territory—a 20% decline from the most recent high. The Dow Jones Industrial Average fell 0.3%. The Nasdaq Composite Index edged up less than 0.1%. All three indexes are on pace for weekly declines of at least 3.5%.

Stocks have come under pressure due to concerns about the US Federal Reserve's pullback of easy monetary policies as it combats the recent bout of high inflation. Consumer prices rose in April at a slower pace than the previous month, but still faster than economists had expected, data released Wednesday showed.

That fuelled more worries that the central bank will raise interest rates at an aggressive pace and crush economic growth, weighing on markets that had grown accustomed to loose monetary policy.

"They [tech investors] found themselves at the most vulnerable time, the farthest out on the cliff, so now they're walking back from the cliff and trying to get on more solid ground, and they're changing their risk profiles," said Dan Genter, chief executive and chief investment officer of Genter Capital Management.

Locally, the S&P/ASX 200 closed 1.75% lower at 6941.0 as a tech rout helped drag the index to its lowest close since March 8. The benchmark index was 0.5% lower after an hour but losses grew steadily as all 11 sectors lost ground.

The tech sector tumbled 8.7% for its worst day since the Covid-19 pandemic roiled global markets in March 2020. Block's local securities shed 18%, while Altium, Life360 and Xero gave up 17%, 12% and 12%, respectively.

Only 13 ASX 200 components gained ground, with commodity and consumer stocks also weak.

Three ETFs that invest in bitcoin or ethereum made their debut on Australia's Cboe on Thursday, a brutal day for cryptocurrencies.

"Couldn't have imagined a more challenging day for Australia's new crypto ETFs to debut," tweeted City Index market analyst Tony Sycamore.

Commonwealth Bank added 0.6% after announcing its 3Q results.

The ASX 200 is 3.7% lower for the week and on course for its biggest weekly loss since October 2020.

In commodity markets, Brent crude oil rose 0.3% to US$107.88 a barrel. Iron ore lost 4.5% to US$127.55. Gold fell to 1.6% to US$1824.60.

Bonds rallied for another day, with the yield on the Australian 2 Year government bond down to 2.59% while the 10 Year eased to 3.42%. Overseas, Yields on US Treasury 2 Years slipped to 2.56%, and the 10 Year fell to 2.85%.

The Australian dollar was buying 69.53 US cents as of 7.00am on Friday, up from the previous close of 69.36. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies rose to 96.96.

Asia

Chinese stocks ended the session mixed, tracking broad declines among Asian equities as investors digested higher-than-expected US inflation data. The Shanghai Composite Index edged 0.1% lower to 3054.99, while the Shenzhen Composite Index rose 0.2% to 1921.65 and the ChiNext Price Index added 0.2% to 2351.27. Developments surrounding China's Covid-19 policies will remain in focus, after the country's censors blocked the WHO's criticism of its zero-Covid strategy from social media on Wednesday.

"China's Covid-zero policy will continue crimping growth....Nor has China's property developer debt woes gone away, with news that major developer Sunac has missed a foreign currency bond payment," Oanda senior market analyst Jeffrey Halley said in a note.
Hong Kong's Hang Seng Index ended 2.2% lower at 19380.34, as investors continue to digest the latest US inflation data.

The higher-than-expected inflation print has fuelled worries that central banks might move to curb demand more aggressively, IG's market strategist Yeap Jun Rong says in a note.
The Chinese property market is also in focus following news that one of the country's largest developers, Hong Kong-listed Sunac China, failed to meet debt obligations on various senior notes. Sunac China is currently on a trading halt. Among other property stocks, Longfor Group drop 3.5% and China Overseas Land & Investment lost 4.8%.

Japan's Nikkei Stock Average fell 1.8% to close at 25748.72 amid concerns about Fed tightening. A mixed bag of companies led the declines on the Nikkei. M3 Inc. slid 10%, NTT Data dropped 9.85% and Lasertec lost 9.1%. Meanwhile, Olympus Corp. climbed 11% after projecting a 33% rise in fiscal-year net profit.

Europe

European markets pared some losses after a mixed start to trading on Wall Street. Having dropped nearly 2% earlier, the Stoxx Europe 600 retreated 0.7%, while the French CAC 40 backtracked 1%, the German DAX fell 0.6%.

"Investors will have been hoping for a bounce and given oversold ratings across a host of markets, traders will have been expecting one," IG analyst Chris Beauchamp says. "But given the damage done in recent weeks and the still-strong fears about a recession, it seems silly to expect things to return to the orderly gains that prevailed in 2021."

London’s FTSE 100 closed down 1.6% as the UK saw the risk of a sharp economic downturn increase as it published weak GDP data for the first quarter and investors worried the US Federal Reserve would hamper growth in its effort to bring inflation under control.

"Whether the UK suffers a technical recession or something more severe will largely depend on the choices consumers make and the development of external risks," Kallum Pickering, a senior economist at Berenberg, said in a note.

JD Sports Fashion was the biggest riser in the day, up 6.6%, followed by Coca-Cola HBC AG, up 5.6%, and fashion retailer Next, up 3.4%. Fresnillo was the biggest faller in the session, down 8.9%, followed by Endeavour Mining, down 7%, and BP, down 4.7%.

North America

The Dow Jones Industrial Average declined for a sixth consecutive session Thursday, extending a streak of volatility in a market driven by worries that the Federal Reserve will hamper growth in its effort to bring inflation under control.

The blue-chip index fell 0.3%. The S&P 500 declined 0.1%. The Nasdaq Composite Index edged up less than 0.1%. All three indexes are on pace for weekly declines of at least 3.5%.

Stocks have come under pressure due to concerns about the Fed's pullback of easy monetary policies as it combats the recent bout of high inflation. Consumer prices rose in April at a slower pace than the previous month, but still faster than economists had expected, data released Wednesday showed.

That fuelled more worries that the central bank will raise interest rates at an aggressive pace and crush economic growth, weighing on markets that had grown accustomed to loose monetary policy. Tech stock particularly flourished in the ultra-low interest-rate era and have tumbled sharply this year, with the Nasdaq Composite trading at its lowest level since November 2020.

"They [tech investors] found themselves at the most vulnerable time, the farthest out on the cliff, so now they're walking back from the cliff and trying to get on more solid ground, and they're changing their risk profiles," said Dan Genter, chief executive and chief investment officer of Genter Capital Management.

Mr. Genter recommends investors to take advantage of the recent declines in the market, which have made equities more affordable. His firm isn't worried about a recession but is still holding dividend-paying stocks out of caution.

The yield on the benchmark 10-year Treasury note declined to 2.815%, edging down for a fourth consecutive trading session. Bond yields and prices move in opposite directions.

The recent declines in Treasury yields signal that the relationship between bonds and stocks could be improving. Earlier in the year, stocks and bonds fell in tandem at a pace not seen in decades.

"It's possible the correlation between bonds and equities from here on goes back to being negative and that's one of the elements needed to stabilize the markets," said Olivier Sarfati, head of equities at GenTrust.

The producer-price index, another inflation metric, rose by an annual rate of 11% in April. That marked a decline from the previous month, but was still ahead of the predictions of economists. Weekly jobless claims came in at 203,000, nearly unchanged from the previous week.

"Markets, on the margin, have shifted their probability toward a hard landing and toward further tightening from the Fed," said Karim Chedid, an investment strategist at BlackRock. The decline in longer-dated bond yields suggests that growth expectations have fallen, he said.

The dollar strengthened, with the ICE US Dollar Index rising 0.9% to the highest level since 2002. The index measures the greenback against a basket of other currencies.

Cryptocurrencies continued to be volatile, with bitcoin falling to as low as $25,402.04 Thursday, its lowest level since December 2020, before rebounding to about $28,300, according to CoinDesk. It has lost about 60% of its value since its peak last November. Ether declined 4.8% from Wednesday to trade around $1,933.85.

Coinbase added $4.78, or 8.9%, to $58.50, after losing more than a quarter of its value on Wednesday.

"As inflation has been high, the Fed has been getting more restrictive on monetary policy, so it makes sense conceptually that you would see multiple contractions, and obviously those names with the biggest multiples have felt the biggest pressure," said Bill McMahon, chief investment officer of Active Equity Strategies at Schwab Asset Management. Mr. McMahon recommends investors seek safety in defensive sectors of the market.

In corporate news, Beyond Meat edged down $1.09, or 4.2%, to $25.08 after the meat-alternative company reported a wider-than-expected loss in the latest quarter due to higher spending.

Shares of WeWork rose 53 cents, or 10%, to $5.63 after reporting a narrower loss and raising its guidance. Walt Disney declined 9 cents, or 0.9%, to $104.31 after the company reported higher operating losses and said it may not maintain its current growth rate in streaming subscribers.

Meme stocks climbed. GameStop rose $8.24, or 10%, to $89.57. AMC Entertainment added 83 cents, or 8%, to $11.20. Bed Bath & Beyond gained 18 cents, or 2%, to $9.40.

Meanwhile, Saudi Aramco, the state-owned oil company, surpassed Apple as the largest company in the world by market value, according to Dow Jones Market Data. Apple's stock fell $3.94, or 2.7%, to $142.56.

Oil prices fell after US crude inventories rose more than expected, then recovered a bit. Global benchmark Brent crude fell 6 cents a barrel, or less than 0.1%, to $107.45. Prices were also weighed down by slow progress on European Union negotiations to potentially ban Russian crude imports, according to analysts at ANZ.