Australia

The Australian market is set to dip on open this morning as US earnings season casts further doubts on economic growth after profits at JPMorgan Chase missed analyst expectations.

ASX futures were down 52 points or 0.8% at 6489 as of 8:00am on Thursday, pointing to a small fall at the open.

Stocks fell sharply after Thursday's open, then gradually recovered. The S&P 500 finished off 0.3%. The Dow Jones Industrial Average lost 142.62 points, or 0.5%, at 30630.17. The blue-chip index also notched a five-day losing streak. The technology-heavy Nasdaq Composite Index inched up 3.60 points, or less than 0.1%, to 11251.19. Major benchmarks fell Wednesday after data showed inflation at a fresh four-decade high.

The second-quarter earnings season ramped up Thursday, with reports from JPMorgan Chase and Morgan Stanley. JPMorgan Chase shares fell $3.91, or 3.5% to $108 after the bank said it set aside another $428 million to cover possible future loan losses, suggesting it had grown more dour about the US economy. Net income dropped approximately 30%. The stock was a top decliner on the Dow.

"We're starting to head into the heavy-duty earnings season and people are going to be combing through those earnings reports looking for any hint of softness or how companies are dealing with what they're seeing in their own individual markets," said Cheryl Smith, economist and portfolio manager at Trillium Asset Management.

Locally, the S&P/ASX 200 closed up 0.4% at 6650.6, as materials and energy stocks rose amid higher commodity prices. Iron-ore miners BHP, Rio Tinto and Fortescue added between 1.3% and 2.5% to help the benchmark index shrug off the weak lead from US equities.

Shares of lithium and some gold miners also gained, while energy explorers, Santos and Woodside, rose 1.45% and 1.6%, respectively. Whitehaven jumped 6.5% and fellow coal miner New Hope added 5.7%.

Tech and consumer stocks also rose, but overall gains were pared by the financial and real-estate sectors.

Banks NAB, Westpac, Commonwealth and ANZ lost between 0.5% and 2.2% even as data showed Australia's unemployment rate hit a 48-year low in June.

In commodity markets, Iron ore fell 8.4% to $US100.25 a tonne, Brent crude oil gained 0.17% to $US99.74 a barrel, while gold declined 1.71% to US$1,705.80.

In local bond markets, the yield on Australian 2 Year government bonds is up 2.55% while the 10 Year also rose to 3.40%. Overseas, the yield on 2 Year US Treasury notes moved up to 3.13% and the yield on the 10 Year US Treasury notes increased to 2.96%.

The Australian dollar is down 0.2% to 67.46 US cents as of 6.30am AEST. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies rose to 100.28.

Asia

China stocks ended broadly higher. The benchmark Shanghai Composite Index inched 0.1% lower to 3281.74, the Shenzhen Composite Index gained 0.8% to 2192.70 and the ChiNext Price Index advanced 2.6% to 2819.13. Auto stocks were mixed, with BYD Co. climbing 4.2% while SAIC Motor was 1.1% lower. Sentiment was partly supported by recent data showing that China's trade surplus in June surged to $97.94 billion, its highest on record, OCBC analysts said in a note. "China's 10.3% total trade growth in the first half of 2022 showed that China continued to gain market share of global trade," they added.

Hong Kong's Hang Seng Index ended lower for the third straight session, dropping 0.2% to 20797.95. Property developers were among the top laggards, while tech shares strengthened. The real estate sector is beset by fresh concerns about unfinished construction in China, Nomura analysts said in a note. Country Garden skidded 8.5%. Game developers Kingsoft and Bilibili each rose 3.5% after their games were among the latest batch that authorities approved for release. Tencent Holdings, which didn't make it to the list, shed 0.7%. Tianqi Lithium recovered heavy losses early in its market debut to finish flat.

Japanese shares ended higher, led by gains in power and auto stocks, as concerns eased somewhat about higher fuel costs. Tokyo Electric Power advanced 5.3% and Honda Motor added 2.5%. The Nikkei Stock Average rose 0.5% to 26478.77. U.S. inflation data due later in the day will be watched closely. USD/JPY was at 137.02, compared with 136.86 as of Tuesday 5 p.m. Eastern Time. The yield on the 10-year Japanese government bond fell one basis point to 0.230%.

Europe

European stocks fell in closing trade as political uncertainty in Italy and worries over weaker eurozone economic growth and soaring inflation weigh on markets.

"European markets have slipped back sharply today on a combination of rising political risk in the euro-area as the Italian government teeters on the brink of collapse, and the EU Commission cut its [euro-area] GDP forecasts for 2022 to 2.6% while upgrading its average inflation prediction for the year to 7.6%," CMC Markets analyst Michael Hewson wrote.
Italy's FTSE MIB slumped 3.4%, leading the declines in European indices, while the pan-European Stoxx 600 dropped 1.5%, Germany's DAX slipped 1.9% and France's CAC 40 shed 1.4%.

The FTSE 100 ended Thursday down 1.6%, as the rampant dollar put foreign exchange and commodity prices on the backfoot. Bank earnings have provided a warning of what is to come this earnings season, with the fearful outlook driving stocks and commodities lower, with dramatic declines hitting FTSE miners particularly hard, IG Group senior market analyst Joshua Mahony says in a research note.

"Nevertheless, for those concerned about the impact of rising inflation, there could be some respite given today's 3%-5% declines across everything from soft commodities, precious metals, and energy markets," Mahony says.

North America

The S&P 500 recorded a fifth consecutive down day as earnings reports from financial behemoths spotlighted concerns about the economic outlook.

Stocks fell sharply after Thursday's open, then gradually recovered. The S&P 500 finished off lower 0.3%, to 3790.38. The Dow Jones Industrial Average lost 0.5%, at 30630.17. The blue-chip index also notched a five-day losing streak. The technology-heavy Nasdaq Composite Index inched up less than 0.1%, to 11251.19. Major benchmarks fell Wednesday after data showed inflation at a fresh four-decade high.

The second-quarter earnings season ramped up Thursday, with reports from JPMorgan Chase and Morgan Stanley. More results from the country's top financial institutions are slated for Friday and Monday. With fears of a potential recession looming, investors are looking to what bank executives say about the state of the economy as much as their institutions' balance sheets.

"We're starting to head into the heavy-duty earnings season and people are going to be combing through those earnings reports looking for any hint of softness or how companies are dealing with what they're seeing in their own individual markets," said Cheryl Smith, economist and portfolio manager at Trillium Asset Management.

JPMorgan Chase shares fell $3.91, or 3.5% to $108 after the bank said it set aside another $428 million to cover possible future loan losses, suggesting it had grown more dour about the US economy. The stock was a top decliner on the Dow.

"When you see interest rates move up and there is a downturn in the economy you will inevitably see more people unable to make their loan repayments," said Stephen Innes, managing partner at SPI Asset Management.

Morgan Stanley shares slipped 29 cents, or 0.4%, to $74.69 after it said second-quarter profit slumped 29%. Both banks reported earnings per share that missed analysts' forecasts, suggesting that earnings estimates are too optimistic, Mr. Innes said.

The KBW Nasdaq Bank Index shed 2%.

Investors also parsed a fresh inflation reading showing producer prices picked up in June. The producer-price index, which generally reflects supply conditions in the economy, increased to 11.3% last month from the year prior, according to the Labor Department.

The latest update on wholesale prices comes a day after the Labor Department said consumer inflation hit a fresh four-decade high last month. The stronger-than-expected reading heightened investors' fears the Federal Reserve will be more aggressive in raising interest rates than anticipated.

Fed governor Christopher Waller on Thursday said he would favor a 0.75-percentage-point rate hike at the central bank's meeting later this month -- though disappointing economic data between now and then could tip the scale in favor of a larger increase.

"When you make a list of potential issues going forward...it could be a soft landing or a hard landing," JP Morgan Chase Chief Executive Jamie Dimon said Thursday. "You do have a serious set of issues out there."

The yield on the 10-year Treasury note rose to 2.957% from 2.904% on Wednesday, while the yield on the two-year note was unchanged. Bond yields rise as prices fall. The two-year yield remained above the 10-year yield, a situation known as an inverted yield curve that is often taken as a predictor of a recession.

"The Fed will keep hiking rates until they get material signs that the economy is rolling over," said Charles Diebel, head of fixed income at Mediolanum International Funds. "Effectively the Fed has got to keep hiking rates until they break something."

Jobless claims edged up last week to the highest level this year, data released Thursday showed. The figures, though low by historic standards, have trended higher in recent weeks.


Energy stocks were the worst-performing sector in the S&P 500, down 1.9%. Marathon Oil Corp. and Valero Energy Corp. both lost 1.6%. Other commodity-related companies also fell Thursday: Fertilizer stocks CF Industries Holdings and Mosaic each dropped 5.7%, among the biggest losers on the S&P 500.

Conagra Brands saw the steepest decline on the S&P 500 after the food company's latest earnings report. Shares sunk $2.59, or 7.2%, to $33.15. The maker of Duncan Hines cake mixes and Slim Jim meat snacks said it plans further price increases in the coming months as it races to offset double-digit cost inflation.