Australia

Shares are expected to start lower on the Australian market after a negative lead from Wall Street following disappointing financial results and worries about a US coronavirus stimulus plan.

The Australian SPI 200 futures contract was lower by 26.0 points, or 0.43 per cent, to 5,960.0 points at 8am Sydney time on Wednesday.

Overnight, several major US companies reported earnings that fell short of analysts' already lowered expectations as the coronavirus pandemic stole customers away and increased some costs.

Conglomerate 3M fell 4.8 per cent after it reported a second-quarter plunge in demand across its businesses and McDonald's Corp fell 2.5 per cent after a surprisingly big drop in global same-store sales.

The US Federal Reserve also began a two-day meeting on interest rates, with an announcement scheduled for Thursday AEST. Investors largely expect the central bank to keep short-term rates at their record low.

The S&P 500 fell 0.6 per cent to 3,218.44 after a last-hour slide, the Dow Jones Industrial Average dropped 0.8 per cent to 26,379.28 and the Nasdaq composite lost 1.3 per cent to 10,402.09.

In Australia today, investors will be watching for inflation data for the June quarter.

Economists expect Australia's key inflation measure, the consumer price index, will drop about 2.0 per cent on the back of lower fuel prices and free childcare amid the pandemic.

A 2.0 per cent drop would be the biggest quarterly fall since records began in 1948 and would take the annual rate negative for the first time since 1997.

Mining giant Rio Tinto is also set to unveil its half year results after market hours.

Meanwhile, the Australian dollar was buying 71.56 US cents at 8am, higher from 71.32 US cents at Tuesday's close.

Asia

Chinese shares rose the most in a week on Tuesday on signs of a recovery in the world’s second largest economy, but Sino-US tensions and fresh flare-ups of coronavirus cases capped the rise.

At the close, the Shanghai Composite index was up 0.7 per cent at 3,227.96. The blue-chip CSI300 index had gained 0.9 per cent. Both indexes saw the highest single-day rise since 20 July.

The Hong Kong stock market edged up on Tuesday, buoyed by hopes of economic and corporate earnings recovery, though concerns over a fresh wave of domestic coronavirus cases kept gains in check.

The Hang Seng index closed up 0.7 per cent at 24,772.76. The Hang Seng China Enterprises index rose 0.8 per cent. 

The Hang Seng sub-index tracking the financial sector edged down 0.1 per cent and the property sector lost 0.3 per cent.

Japanese shares ended lower on Tuesday as investors maintained a cautious stance ahead of corporate earnings, while Mitsubishi Motors plunged to an all-time low after the carmaker posted dismal quarterly numbers.

The Nikkei share index fell 0.26 per cent to 22,657.38, while the broader Topix lost 0.48 per cent to 1,569.12.

Europe

European shares closed modestly higher on Tuesday, as investors assessed a batch of mixed earnings reports while holding out for more US stimulus to limit the economic damage of covid-19.

The pan-European STOXX 600 rose 0.4 per cent, with defensive sectors such as healthcare, food & beverage and utilities boosting the main index. Travel stocks rebounded from losses on Monday when worries of a resurgence in coronavirus cases in Europe hit risk sentiment.

Investors awaited the conclusion of a US Federal Reserve meeting on Wednesday, when policymakers are expected to reiterate their supportive stance as talks loom over another round of fiscal stimulus for the US economy.

Earnings season also kicked into high gear in Europe, with luxury giant LVMH sliding 4.1 per cent as store closures sparked by the pandemic tore a hole into the Louis Vuitton owner’s second-quarter sales.

Gucci owner Kering and France’s Hermes slipped over 2 per cent, while Moncler, which makes luxury puffer jackets, shed 4.4 per cent after reporting a first-half operating loss for the first time in its history.

Profits for companies listed on the STOXX 600 are expected to drop by a record 59 per cent in the second quarter, according to Refinitiv data.

But with much of the decline priced in, European stocks are on course to end July with gains, supported by a European Union deal to jointly issue bonds to combat the economic fallout of the pandemic and hopes of a covid-19 vaccine.

Peugeot maker PSA Group rose 2.4 per cent as it held on to its margin target despite a fall in profitability in the first half of 2020.

Online takeaway food company Delivery Hero jumped 2.4 per cent after it raised its forecast for 2020 sales after nearly doubling quarterly revenues.

British housebuilders jumped 2 per cent after a report that the UK government is drawing up an extension to its Help to Buy scheme, which makes it easier for first-time buyers to afford a home.

North America

Wall Street closed lower on Tuesday as investors fretted about weakening consumer confidence, disappointing financial results and as investors worried about wrangling in the US Congress over a coronavirus aid plan.

Weighing heavily on the Dow were industrial conglomerate 3M Co, down 4.8 per cent, after it reported a second-quarter plunge in demand across its businesses and McDonald’s Corp, which fell 2.5 per cent, after a surprisingly big drop in global same-store sales.

Data released in the morning showed US consumer confidence ebbed in July as coronavirus infections flared up across the country.

As they waited on a stimulus package agreement and for quarterly reports in one of the busiest weeks in earnings season, investors were also anticipating the US Federal Reserve’s Wednesday wrap-up of its two day policy meeting.

Meanwhile, Florida reported a record one-day rise in coronavirus deaths, and cases in Texas passed the 400,000 mark, stoking fears the US was losing control of the outbreak.

Feeding the fears, members of congress were sparring over a US$1 trillion ($1.4 trillion) aid proposal from Senate Republicans announced on Monday, four days before millions of Americans lose unemployment benefits.

The indexes lost further ground late in the session after US Senate Majority Leader Mitch McConnell said no coronavirus bill would be brought to the senate floor without legal liability protections for corporations, a measure opposed by the Democratic majority in the House of Representatives.

The Dow Jones Industrial Average fell 205.49 points, or 0.77 per cent, to 26,379.28, the S&P 500 lost 20.97 points, or 0.65 per cent, to 3,218.44 and the Nasdaq Composite dropped 134.18 points, or 1.27 per cent, to 10,402.09.

Materials, energy and consumer discretionary were the biggest percentage decliners of the S&P’s 11 major sectors. Defensive real estate, utilities and consumer staples sectors were the only gainers.

Another focus this week is results from Wall Street’s trillion-dollar market value companies—Apple, Amazon.com and Alphabet—as well as Facebook.

Of the S&P 500 companies that have reported earnings so far this quarter, about 80 per cent surpassed significantly lowered profit forecasts, according to Refinitiv IBES data.

Pfizer shares rose 3.9 per cent after it raised its full-year forecast a day after it announced a pivotal global study to evaluate a covid-19 vaccine candidate.