Australia

Australian shares are set to fall following a mixed day on Wall Street as earnings disappointed and hopes of a pre-election covid stimulus fade.

The Australian SPI 200 futures contract was down 23 points, or 0.4 per cent, to 6,021 points at 8.30am Sydney time on Wednesday, suggesting a negative start to trading.

Stocks on Wall Street closed little changed on Tuesday, with the Dow and S&P 500 slipping on disappointing earnings and little hope for a US coronavirus stimulus before Election Day, though the Nasdaq rose ahead of big technology company results.

The Dow Jones Industrial Average fell 222.19 points, or 0.8 per cent, to 27,463.19 and the S&P 500 lost 10.29 points, or 0.30 per cent, to 3,390.68. The Nasdaq Composite added 72.41 points, or 0.64 per cent, to 11,431.35.

Locally, RBA deputy governor Guy Debelle told a Senate estimates hearing on Tuesday a revival was under way and the impact of 111 days of lockdown in Victoria might not be as deep as feared.

“Our best guess is it looks like the September quarter for the country recorded positive growth rather than slightly negative,” Dr Debelle said.

The S&P/ASX200 benchmark index finished lower by 104.6 points, or 1.7 per cent, to 6,051 on Tuesday, after US markets closed down on surging coronavirus infections and election jitters.

The ASX200 edged lower for most of the day, and reached its weakest point of 6,033.8 at 1410 AEDT. The All Ordinaries closed down by 110.1 points, or 1.73 per cent, to 6,247.2. The ASX reached a three week low and a fourth consecutive loss.

Gold was up 0.3 per cent at $US1,908.31 an ounce; Brent oil was up 1.9 per cent to $US41.24 a barrel; Iron ore was up 0.4 per cent to $US115.13 a tonne.

Meanwhile, the Australian dollar was buying 71.37 US cents at 8.30am, up from 71.35 US cents at Tuesday’s close.

Asia

Shanghai shares closed up in a subdued session on Tuesday as gains in materials and healthcare firms nudged the benchmark index higher, but slower profit growth at industrial firms in September underscored continuing challenges to China’s recovery.

Profits at China’s industrial firms rose 10.1 per cent in September year-on-year, a fifth straight monthly rise, but growth slowed from August, data from the National Bureau of Statistics showed on Tuesday, as factory-gate deflation and rising raw materials costs undercut a recovery in the manufacturing sector.

China’s economic growth is expected to hit a 44-year low in 2020 as the country recovers from a coronavirus-induced slump, a Reuters poll showed on Tuesday. At the close, the Shanghai Composite index was up 0.1 per cent at 3,254.32.

Hong Kong shares ended lower on Tuesday, as global investor sentiment took a hit from surging covid-19 cases globally and slow progress on a US stimulus deal, even as a record-breaking IPO by Ant Group drew strong demand. At the close of trade, the Hang Seng index was down 131.59 points or 0.53 per cent at 24,787.19.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.26 per cent, while Japan’s Nikkei index closed down 0.04 per cent.

Europe

European stocks extended losses on Tuesday as worries about the economic fallout of tighter coronavirus restrictions on the continent overshadowed some better-than-expected earnings reports.

The pan-European STOXX 600 index fell 1 per cent to a one-month low, on rising infections in the United States and Europe and fading hopes of a US stimulus package before the presidential election.

Focus will now be on Thursday’s meeting of the European Central Bank for clues on monetary stimulus for the bloc.

“The ECB is widely expected to stand pat until the next meeting. Macro forecasts won’t be updated until the December 10 meeting, but the bank will have to acknowledge the deteriorating outlook now,” said Win Thin, global head of strategy at Brown Brothers Harriman.

"There's a small risk of more jaw boning against the stronger euro." Germany's DAX shed 0.9 per cent to hit four month lows, while France's CAC 40 fell 1.8 per cent to a one-month trough as the country grappled with a runaway infection rate.

German Chancellor Angela Merkel is planning a “lockdown light” in Europe’s largest economy that would mainly focus on the closure of bars and restaurants to slow down a second wave of infections, newspaper Bild reported.

Losses on the UK's FTSE 100 were limited by a 3.4 per cent jump in Europe's biggest bank HSBC after the lender signalled a pandemic-induced overhaul of its business model, accelerating plans to shrink in size and slash costs.

But shares in oil major BP fell 2.1 per cent. The company swung back to a small profit in the third quarter, but also warned of pandemic-related uncertainties. Europe's oil and gas sector index touched its lowest level in seven months.

Spanish bank Santander closed down 1.3 per cent as it tracked broader negative investor sentiment in the market. It had earlier in the day logged gains of up to 5 per cent after saying it expects 2020 core profit to beat market expectations, helped by additional cost savings of 1 billion euros.

Spain's IBEX index fell 2.1 per cent, also on worries about the economic impact of coronavirus-related curbs.

Third-quarter earnings from Europe remain largely positive. Out of the 27 per cent of the STOXX 600 companies that have reported so far, 73 per cent have beat profit expectations, according to Refinitiv data.

French consulting and IT services provider Capgemini jumped 2.1 per cent after confirming its full-year targets.

Tobacco group Swedish Match climbed 3.5 per cent as it reported a bigger-than-expected rise in quarterly profit on the back of higher sales of smokeless products.

Miners fell 1.4 per cent, dragging markets lower, after Liberum analysts downgraded stocks of Rio Tinto, Antofagasta and KAZ Minerals.

North America

Stocks on Wall Street closed little changed on Tuesday, with the Dow and S&P 500 slipping on disappointing earnings and little hope for a US coronavirus stimulus before Election Day, though the Nasdaq rose ahead of big technology company results.

Investor sentiment sagged after the White House said a deal on covid-19 relief could come in “weeks,” meaning a deal is unlikely before the 3 November election.

But the tech-heavy Nasdaq rose as Microsoft Corp firmed in the run-up to its results after the closing bell, and the technology heavyweights kept the S&P 500 slightly in the black for much of the session.

Microsoft beat Wall Street estimates for quarterly revenue which rose 12 per cent to $37.2 billion, as the software giant benefited more from a global shift to work and learning from home.

Shares of drugmaker Eli Lilly and Co fell 6.9 per cent after quarterly profits took a hit from increased costs to develop a covid-19 treatment. A trial of its antibody therapy failed to show a benefit in hospitalised patients.

“This pullback that we’ve seen is a little bit more of a risk-off move as an additional stimulus package now has been pushed aside,” Kevin Flanagan, head of fixed income strategy at WisdomTree Investments, said. “That led to some disappointment.”

On Monday, the three major US stock indexes posted their biggest declines in about four weeks on a record number of new coronavirus cases in the United States and some European countries, and as the elusive stimulus rattled investors.

Sectors sensitive to economic growth took a hit. The S&P 500 banks index fell 2.73 per cent and the S&P energy sector slid 1.38 per cent.

Meanwhile, Wall Street’s fear gauge rose to its highest level since early September on election jitters.

Democratic challenger Joe Biden leads President Donald Trump in nationwide polls but the race is much tighter in battleground states which should determine the outcome.

The Dow Jones Industrial Average fell 222.19 points, or 0.8 per cent, to 27,463.19 and the S&P 500 lost 10.29 points, or 0.30 per cent, to 3,390.68. The Nasdaq Composite added 72.41 points, or 0.64 per cent, to 11,431.35.

The Nasdaq advanced in anticipation of results later this week from Apple Inc, Amazon.com, Google-parent Alphabet and Facebook Inc. The tech bellwethers together account for more than one-fifth of the S&P 500’s total value.

The NYSE FANG+TM Index rose about 2.15 per cent.

Analysts expect the tech sector to post a 0.4 per cent increase in third-quarter earnings from a year earlier, while overall S&P 500 profit is forecast to fall 16.2 per cent, according to Refinitiv data.

Concerns over a rise in US coronavirus cases are weighing on the market but the technology sector seems to be the least exposed, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

“A focus on big technology companies may move this market to rally despite the problems the virus is creating,” he said.

Semiconductor designer Advanced Micro Devices Inc fell 4.1 per cent after it agreed to buy Xilinx Inc in a $35 billion all-stock deal. Xilinx shares soared 8.6 per cent, the largest percentage gainer on the S&P 500, while those of AMD-rival Intel fell 2.3 per cent.

Shares of Franklin Resources Inc fell 13.6 per cent, the largest decliner on the S&P 500, as the money manager reported quarterly adjusted earnings of 56 cents per share, below analysts’ expectations.