Australia

Australian shares are set to rise though gains could be short lived after US stocks declined in late afternoon selling amid growth jitters.

ASX futures were up 23 points or 0.3% at 7100 as of 8.00am on Tuesday, suggesting a positive start to the day.

The S&P 500 fell 0.4%, reversing modest gains in a bout of selling before the closing bell. The technology-heavy Nasdaq Composite Index dropped 1.2%, weighed by declines at Apple, Alphabet and Amazon. The Dow Jones Industrial Average, however, rose 26.76 points, or 0.1%, to 32223.42.

Even after rallying Friday, the S&P 500 has dropped for six consecutive weeks, its longest weekly losing streak since June 2011. The index is down 16% this year.

Fresh data showing a sharp slowdown in Chinese economic activity on Monday underscored the growing fear that aggressive interest rate hikes from central banks could tip a fragile global economy into recession. Retail sales and industrial production fell further than market expectations as the country’s harsh zero covid policy bites.

Investors are grappling with so many issues -- the Russia-Ukraine war, Federal Reserve policy, inflation, China's economic slowdown -- it is hard for them to justify holding any assets for too long, said City Index market analyst Fawad Razaqzada. Most fundamentally, he said, investor confidence has been badly shaken by the selloff.

Locally, the S&P/ASX 200 closed 0.3% higher at 7093.0 as tech stocks continued their post-selloff rebound from the end of last week. Life360, Block, Appen and Xero added between 3.4% and 4.4%, helping the tech sector add 2.1%. The sector jumped almost 7% on Friday after shedding 17% across the prior five sessions.

The only stronger performer on Monday was the industrials sector, which rose 2.4% on an 11% jump by Brambles. The pallet maker said it had received a takeover approach by CVC Capital Partners.

Banks NAB, ANZ, Commonwealth and Westpac rose by between 0.6% and 1.6%.

Overall gains were pared by weakness in shares of iron-ore miners.

In commodity markets, Brent crude oil rose 2.4% to US$114.24 a barrel. Iron ore added 1.3% to US$128.60. Gold added 0.3% to US$1814.00.

Local bonds were little changed on Monday, with the yield on the Australian 2 Year government bond slightly up to 2.53% while the 10 Year eased to 3.38%. Overseas, yields on US Treasury 2 Years slipped to 2.57%, and the 10 Year dropped to 2.88%.

The Australian dollar rose to 69.66 US cents as of 7.00am on Tuesday, up from the previous close of 69.38 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 96.47.

Asia

China stocks ended lower, as investors digested weak April retail sales data, a proxy for the country's overall consumption. The metric fell 11% in the past month, marking its worst drop since March 2020. The benchmark Shanghai Composite Index fell 0.3% to settle at 3073.75, while the Shenzhen Composite Index was down 0.3% at 1926.01. The tech-heavy ChiNext Price Index fared the worst, losing 1.1% to 2331.23. Consumer goods companies, including condiment makers and dairy producers, led the downturn. Medical services providers, such as Covid-19 testing companies and drug developers, further weighed on the market.

In Hong Kong stocks ended the session higher, with the benchmark Hang Seng Index rising 0.3% to settle at 19950.21. Chinese property developers led gains, as investors welcomed news reports that three private real-estate companies, Longfor, Country Garden and Midea Real Estate, have been selected by regulators for onshore bond issuance as early as this week. Jefferies analysts said in a note today that the move could boost investor sentiment in the near term. Country Garden soared 10% to become the index's top performer, and Longfor was up 4.8%. Midea Real Estate, which is not a constituent of the index, jumped 7.9%.

Meanwhile in Japan, the Nikkei Stock Average closed 0.5% higher at 26547.05, supported by ongoing expectations for an earnings recovery from the pandemic. Warehouse-equipment maker Daifuku Co. advanced 11% after it projected a 10% rise in its FY net profit. Suntory Beverage & Food rose 5.0% following news that it planned to raise prices for nonalcoholic drinks in plastic bottles. Mining stocks were higher, with Nittetsu Mining adding 0.9% and Inpex Corp. gaining 0.4%.

Europe

European markets traded mixed on Monday after downbeat Chinese economic data and a lower open on Wall Street.

The pan-European Stoxx Europe 600 edged 0.1% lower, the French CAC 40 dropped 0.5% and the German DAX was 0.7% off.

"After an early dip prompted by a sharp slowdown in Chinese retail sales in April, European markets have recovered to some extent from their intraday lows," CMC Markets analyst Michael Hewson says in a note. "Sentiment remains cautious, with the DAX sliding as it becomes ever more apparent that the Chinese economy is likely to stay in the doldrums for a while yet," he says.

London’s FTSE 100 bucked the downwards trend in Europe to close 0.6% higher after basic resources performed well despite weakness in commodity prices and on news that Abu Dhabi's Etisalat had bought a 9.8% stake UK telecoms group Vodafone. While Etisalat has said that it has no designs on getting a seat on the board, the move is likely to increase pressure on CEO Nick Read, Michael Hewson, chief market analyst at CMC Markets UK, says in a research note. Elsewhere, Ryanair said it expects to return to profitability in fiscal 2023 and warned of higher fares coming during the summer period.

North America

US stocks finished mostly lower Monday, extending the market's recent selloff.

The S&P 500 fell 0.4%, reversing modest gains in a bout of selling before the closing bell. The technology-heavy Nasdaq Composite Index dropped 1.2%, weighed by declines at Apple, Alphabet and Amazon. The Dow Jones Industrial Average, however, rose 26.76 points, or 0.1%, to 32223.42.

Even after rallying Friday, the S&P 500 has dropped for six consecutive weeks, its longest weekly losing streak since June 2011. The index is down 16% this year.

Among Monday's biggest decliners were shares of travel and casino companies. Expedia Group, Caesars Entertainment and Penn National Gaming all dropped more than 5%. The consumer discretionary and technology sectors led the index lower.

Investors, worried that the Federal Reserve has been too late to spot the risks from soaring inflation, fear the central bank will move too aggressively to fight it, a mistake that could tip the economy into a recession.

The resulting selloff, which has been compounded by the war in Ukraine and Covid-19 lockdowns in China, has been broad, affecting most assets from cryptocurrencies and stocks to government bonds, leaving investors unsure of where to seek safety.

After weeks of losses, some investors are holding on to stocks, or buying more, hoping declines are reaching their nadir. Others are settling in for a protracted period of volatility.

"We are moving into a more challenging time for markets. We need to see signs that inflation is not just peaking but actually decelerating before you find a sustainable bottom in the market. That is going to take at least a couple of months," said David Donabedian, chief investment officer at CIBC Private Wealth.

"That doesn't mean we won't have counter-rallies higher from day to day, but I think this is a long, drawn-out process and it is largely data-driven," he said.

Investors are grappling with so many issues -- the Russia-Ukraine war, Federal Reserve policy, inflation, China's economic slowdown -- it is hard for them to justify holding any assets for too long, said City Index market analyst Fawad Razaqzada. Most fundamentally, he said, investor confidence has been badly shaken by the selloff.

After Friday's rally, investors are hoping that at least a temporary bottom has been put in, several analysts said.

But from a broader perspective, the changes in monetary policy and the rise in inflation have fundamentally changed the dynamic between stocks and bonds, said Evercore ISI analyst Julian Emanuel.

Stocks can still go up, he said, but because of rising bond yields, the upside for equities will be "truncated" as opposed to "runaway."

Among individual stocks, Twitter shares fell $3.33, or 8.2%, to $37.39 on Monday after Elon Musk on Saturday said the company's legal team accused him of violating a nondisclosure agreement. Mr. Musk Friday said that his $44 billion acquisition of the social-media company was "on hold," sending the company's shares down nearly 10%.

Spirit Airlines jumped $2.29, or 13%, to $19.27 after The Wall Street Journal reported that JetBlue Airways plans to launch a hostile takeover attempt of the discount carrier. JetBlue shares lost 61 cents, or 6.1%, to $9.45.

McDonald's shares slipped $1, or 0.4%, to $244.04 after the company said it would quit Russia and sell its business there.

In bond markets, the yield on the benchmark 10-year US Treasury note edged down to 2.877% from 2.932% on Friday.

In commodities, US crude oil jumped 3.4% to $114.20 a barrel. The US national average price of regular gas at the pump rose to a high of $4.48 a gallon, according to AAA.

One signal investors are using to gauge a possible bottom is, surprisingly, bitcoin. The cryptocurrency careened last week amid a collapse in the stablecoin TerraUSD and is down about 35% year to date. But as bitcoin has become more tightly attached to the wider capital markets, some investors are using its movement as a gauge of speculative appetite, analysts said.

On Monday, bitcoin edged slightly lower, but after last week's carnage, investors were taking it as a sign of stabilization in the markets, according to some analysts. "Stock investors are definitely watching this," Stifel's chief equity strategist, Barry Bannister, said of bitcoin's moves.