Australia

Australian shares are set to rise after Wall Street posted modest gains in a volatile session as investors mulled an accelerated tightening of monetary policy.

ASX futures were up 38 points or 0.5% at 7457 as of 8.00am on Friday, suggesting a positive start to the day.

US stocks, which had fallen earlier in the week, rallied Thursday afternoon after starting the day down. The Dow Jones Industrial Average added 0.25%, the S&P 500 rose 0.4%, and the Nasdaq Composite edged up 0.1%.

Thursday's rally short-circuited a two-day selloff sparked by concerns about Fed policy. On Tuesday, Fed governor Lael Brainard -- a strong advocate last year against prematurely pulling back stimulus -- rattled investors when she said the central bank was committed to taking steps that will reduce inflation this year. On Wednesday the release of Fed meeting minutes showed central bankers considered raising rates by a half-percentage point at their March meeting, higher than the quarter-point increase with which they proceeded.

Federal Reserve Bank President James Bullard added to the chorus of hawkish sentiment this week by arguing rates may need to go above 3% by next year in comments on Thursday. Colleagues from the Chicago and Atlanta Feds separately backed higher rates while highlighting the importance of monitoring how the economy performs.

Locally, S&P/ASX 200 closed 0.6% lower at 7442.8 as weakness in technology stocks continued to weigh on the benchmark. At the same time, Australia's February trade surplus for February contracted more than expected due to a surge in imports.

The technology sector dropped 3.4%, while consumer discretionary stocks lost 1.6%. Tech stocks Wise Tech Global, Square and Xero fell 6.6%, 4.3% and 2.9%, respectively.

Travel stocks Webjet and Flight Centre lost 2.9% and 2.7%, respectively.

Australian fund manager Magellan was the day's top performer, rising 11% after the pace of its outflows appeared to be slowing.

In commodity markets, iron ore slipped back below US$160, losing 3.2% to $US155.05 per tonne; gold futures edged 0.15% lower to $1,934.80; Brent Crude oil dipped 0.5% to US$100.58 a barrel.

US bonds dipped lower for a fifth day as investors remained skittish about government debt. The US 10-Year Treasury Note yield rose to 2.66%, the highest level in just over three years. The yield on the Australian 10-year bond eased to 2.91%. Yields rise when prices fall.

The Australian dollar was buying 74.79 US cents as of 8.00am on Friday, down from the previous close of 74.77. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, rose to 92.18.

Asia

China stocks ended the session lower, extending a muted showing since the market resumed trading after a two-day holiday earlier this week. The benchmark Shanghai Composite Index fell 1.4%, while the Shenzhen Composite Index shed 1.9%. The ChiNext Price Index was the worst performer with a 2.1% decline. The property sector led the downturn amid weak March sales data. China Vanke, one of the country's largest developers, lost 1.5% after the company earlier today posted a 34% drop in contracted sales for March.

Hong Kong stocks ended lower, as the market continued to weaken. The benchmark Hang Seng Index fell 1.2%, tracking losses on Wall Street overnight. Consumer companies led losses, with restaurant operator Haidilao falling 7.2% and Budweiser Brewing down 3.8%. Tech stocks further weighed on the market, as profit-taking pressure emerged after recent strong gains from improving investor sentiment driven by Beijing's support for US-listed Chinese stocks.

The Nikkei Stock Average closed 1.7% lower amid concerns over the US Fed's tightening pace and higher corporate-borrowing costs. Aviation stocks fell, with Japan Airlines declining 2.6% and ANA Holdings slipping 2.0%. Investors will likely continue to focus on developments related to China's Covid-19 outbreak, as well as Russia's war on Ukraine and its impact on commodity prices.

Europe

European stocks closed lower as investors digested the Federal Reserve's latest meeting minutes and monitor the Russia-Ukraine conflict. The Stoxx Europe 600 fell 0.2%, the FTSE 100 dropped 0.5%, the German DAX declined 0.5% and the French CAC 40 slipped 0.6%.

Investors are continuing to absorb the Fed minutes, which outlined plans to shrink the balance sheet by $95B a month with a potential May start date, CMC Markets analyst Michael Hewson says in a note. "Peace talks between Russia and Ukraine don't appear to be going anywhere in the short term with the Kremlin complaining that the US sending weapons to Ukraine wasn't helping the talks to progress," he says.

In London, Insurer Aviva PLC was the day's biggest faller, closing down 4.9%, with Barratt Developments PLC also falling by 4.3%.

North America

US stocks rose and the yield on the 10-year US Treasury note hit a three-year high as investors digested the possibility of more aggressive monetary tightening by the Federal Reserve.

Stocks, which had fallen earlier in the week, rallied Thursday afternoon after starting the day down. The Dow Jones Industrial Average added 0.25%, the S&P 500 rose 0.4%, and the Nasdaq Composite edged up 0.1%.

In Treasury markets, the yield on the 10-year US Treasury note traded at 2.654%, up from 2.606% on Wednesday. That is its highest level since March 6, 2019. Yields rise as prices fall.

The afternoon rally was "tactical," said Asbury Research strategist John Kosar, rather than triggered by specific news. He noted that the S&P 500 and the CBOE's Volatility Index both hit key technical levels after noon, and both turned around at the same time.

"Sometimes the money moves first, the market moves second, and then comes the headline," said Mr. Kosar. What happens over the next few days will tell investors whether this was a genuine turnaround or just a brief respite, he added.

Thursday's rally short-circuited a two-day selloff sparked by concerns about Fed policy. On Tuesday, Fed governor Lael Brainard -- a strong advocate last year against prematurely pulling back stimulus -- rattled investors when she said the central bank was committed to taking steps that will reduce inflation this year. On Wednesday the release of Fed meeting minutes showed central bankers considered raising rates by a half-percentage point at their March meeting, higher than the quarter-point increase with which they proceeded.

"I do think we have to move forthrightly in order to get the policy rate up to the right level to deal with inflation that we've got in front of us," Federal Reserve Bank of St. Louis President James Bullard told reporters after a speech Thursday.

Investors selling this week were seemingly the last to understand that the Fed is actually changing policy, several analysts said, even though it has been stating its intentions for a long time.

"It's almost like the market had a sudden epiphany that the Fed is tightening," said Stifel equity strategist Barry Bannister.

Before this week, the US stock market had been in the midst of a brisk rally, helping indexes erase many of the losses notched in 2022. The rebound, which began in mid-March, seemed to defy issues including the war in Ukraine, rising Covid-19 cases in China and soaring inflation that threatens to worsen supply-chain snarls. Even after losing 2.2% in the previous two sessions, the S&P 500 was down just 6% for 2022, based on Wednesday's closing prices, a comeback from its more than 12% loss at its low this year.

Some investors simply refused to believe the Fed would move aggressively, said Thomas Kee, who writes the Stock Traders Daily newsletter. "It was the lagging kind of psychology from before that [the Fed] would never hurt the market," he said.

However, he added that he didn't see much risk the selloff would go much lower and expected equities to rebound. "The markets forget fast," he said.

Analysts say the recent steadying in some commodities prices has aided the stock market. US crude oil fell 0.2% Thursday to $96.03 a barrel. That is slightly higher than before Russia's invasion of Ukraine but down significantly from the nearly $130 price reached last month.

On the economic front, fresh data Thursday showed that new applications for US unemployment benefits last week fell to a near 54-year low. Initial jobless claims, a proxy for layoffs, fell to 166,000 during the week ended April 2, compared with a revised 171,000 the prior week, the Labor Department said. Economists surveyed by The Wall Street Journal expected 200,000 new claims.

First-quarter earnings season will kick off next week. Many investors say results will likely have a heavy hand in swaying the next phase of the US stock market. Analysts expect earnings for S&P 500 companies to have grown 4.6% during the period compared with a year earlier, FactSet data show.

In individual stocks, shares of HP surged 15%, or $5.15, to $40.06 after Warren Buffett's Berkshire Hathaway disclosed in a filing Wednesday that it has built a stake of more than 11% in the computer-and-printer maker. The holding was worth more than $4.2 billion, based on HP's closing price on Wednesday. Berkshire's Class B shares ticked up 0.5%, or $1.93, to $346.51.

Banks are particularly sensitive to inflation and monetary policy; on Thursday, financials were among the S&P 500's early losers but recovered ground late. The KBW Nasdaq Bank Index was down 0.7%, its seventh down session, matching its longest losing streak since 2018. Bank of America fell for a ninth consecutive session.

Twitter fell 5.4%, or $2.74, to $48.03 as investors continued to digest the implications of Tesla Chief Executive Elon Musk's stake in the social-media company and his appointment to its board.