Australia

Australian shares are set to edge lower following a dip on Wall Street as poor results at social-media app Snap sent digital advertising reliant tech shares lower. Investors are focussed on the US Federal Reserve decision due early Thursday AEST.

ASX futures were down 12 points or 0.2% at 6685 as of 8:00am on Monday, pointing to a slip at the open.

US stocks slumped Friday, snapping a three-day winning streak, as some surprisingly weak quarterly updates from companies spooked investors.

The S&P 500 fell 0.9% a day after the broad benchmark index jumped 1% while the Dow Jones Industrial Average edged down 0.4%. The Nasdaq Composite declined 1.9%, weighed by a 39% plunge at Snap after the social-media app posted its weakest quarterly sales growth as a public company. Tech giants Meta Platforms and Alphabet fell 7.6% and 5.6%, respectively. All three indexes closed the week higher.

With a 2.5% rise for the week, the S&P 500 capped its best week in a month. Nonetheless, few investors are willing to call a bottom to a selloff that has dragged the S&P 500 down 17% this year. Persistently high inflation, the possibility of a recession and the war in Ukraine remain at the forefront of investors' minds. Next week's meeting of the Federal Reserve, as well as coming gross domestic product data, could inject more volatility in the markets.

"We had been enjoying improved sentiment lately," said Kristina Hooper, chief global market strategist at Invesco. "Earnings reports earlier this week weren't terrific, but they also weren't terrible." Come Friday, the "rose-colored glasses" came off, she said.

In commodity markets, iron ore jumped 5.9% to US$104.55, Brent crude oil slipped 0.6% to $US103.20 a barrel, gold edged down 0.2% to US$1,742.30.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 2.69% while the 10 Year fell to 3.43%. Overseas, the yield on 2 Year US Treasury notes declined to 2.97% and the yield on the 10 Year US Treasury notes was down at 2.75%.

The Australian dollar hit 69.26 US cents down from the previous close of 69.34. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 98.65.

Asia

China stocks reversed early gains to end lower amid fears of fresh lockdowns as the country's number of Covid-19 cases continues to rise. The benchmark Shanghai Composite Index slipped 0.1%to 3269.97, Shenzhen Composite declined 0.4% to 2185.41 and ChiNext fell 0.5% to 2737.31. Near-term sentiment may be supported by signs that China's regulatory crackdown is easing against internet giants. China's cybersecurity regulator recently fined Didi Global $1.2 billion, bringing an end to a yearlong investigation into its cybersecurity practices. Energy-related stocks were mostly lower, with Yantai Jereh Oilfield Services falling 2.0% and Cnooc Energy Technology & Services slipped 0.4%. Kweichow Moutai ended 0.4% higher, as it expects its 1H net profit to rise on year.

Hong Kong shares gained, supported by the consumer-services sector, while property-related industries weakened. Casino stocks advanced after news that gambling venues in Macau will be allowed to reopen Saturday. Sands China added 3.8% and Galaxy Entertainment climbed 1.1%. China's property downturn continued to weigh on developers, with Country Garden and China Resources Land down 1.3% and 1.8%, respectively. Construction-material companies also came under pressure. China National Building Material slid 7.4% and Anhui Conch Cement retreated 5.3%. The benchmark Hang Seng Index rose 0.2% to 20609.14, taking weekly gains to 1.5%.

Japanese stocks ended higher, led by gains in electronics and shipping stocks, as concerns eased somewhat about higher costs of fuel and borrowing. Keyence gained 3.0% and Renesas Electronics climbed 2.5%. Kawasaki Kisen Kaisha jumped 11% after it raised its fiscal-year earnings guidance, citing strong shipping demand. The Nikkei Stock Average rose 0.4% to 27914.66. Earnings were in focus.

Europe

European stocks rose as traders assesses corporate earnings and economic data. The pan-European Stoxx Europe 600 gained 0.4%, the German DAX increased 0.2% and the French CAC 40 added 0.2%.

On Friday, fresh business surveys suggested that the eurozone economy contracted in July. Excluding pandemic lockdown months, this would mark the first contraction signalled by purchasing managers' indexes since 2013.

Delivery Hero shares jumped 12.8% after the online food delivery service posted higher second-quarter revenue and raised its margin outlook. Norsk Hydro gained 6.2% after the aluminium maker proposed extra dividends and offered share buybacks after strong second-quarter results. Fortum Oyi advances 11.2% on reports Germany is nearing a deal to bail out Fortum's energy company Uniper.

London’s FTSE 100 closed up 0.1% to 7276 points as European markets shrugged off concerns of an economic slowdown backed by latest PMI data in the region, CMC Markets UK chief market analyst Michael Hewson says in a note.

The market gains on the week appeared to be driven by the views that central bankers may not increase the rates as aggressively than originally expected, he adds. "The weakness in commodity prices is certainly helping investors draw this conclusion, however it still seems a remarkably premature conclusion, even as German 10-year yields hit their lowest levels since May," Hewson says.

North America

US stocks slumped Friday, snapping a three-day winning streak, as some surprisingly weak quarterly updates from companies spooked investors.

The S&P 500 fell 0.9% a day after the broad benchmark index jumped 1% while the Dow Jones Industrial Average edged down 0.4%. The Nasdaq Composite declined 1.9%, weighed by a 39% plunge at Snap after the social-media app posted its weakest quarterly sales growth as a public company. All three indexes closed the week higher.

With a 2.5% rise for the week, the S&P 500 capped its best week in a month. Nonetheless, few investors are willing to call a bottom to a selloff that has dragged the S&P 500 down 17% this year. Persistently high inflation, the possibility of a recession and the war in Ukraine remain at the forefront of investors' minds. Next week's meeting of the Federal Reserve, as well as coming gross domestic product data, could inject more volatility in the markets.

"We had been enjoying improved sentiment lately," said Kristina Hooper, chief global market strategist at Invesco. "Earnings reports earlier this week weren't terrific, but they also weren't terrible." Come Friday, the "rose-colored glasses" came off, she said.

Megacap technology companies Meta Platforms and Alphabet pulled back, falling $13.90, or 7.6%, to $169.27 and $6.44, or 5.6%, to $107.90, respectively. Meanwhile, American Express shares rose $2.83, or 1.9%, to $153.01 after the company reported a 31% rise in revenue.

Among other individual stocks, Twitter shares erased earlier declines and rose 32 cents, or 0.8%, to $39.84 after the company posted a loss and noted that revenue was hurt by uncertainty related to Elon Musk's acquisition.

S&P 500 companies are beating second-quarter earnings estimates by 3.6%, according to FactSet, which is below the five-year average of 8.8%. With about a fifth of the companies in the index having reported, 10 companies have issued earnings guidance for the third quarter that is below consensus estimates, while one has offered a forecast that is ahead of Wall Street's projections.

"Guidance in these earnings reports is all-important to Wall Street," said Michael Farr, CEO of Farr, Miller & Washington LLC. "Companies that have missed earnings estimates have been punished, but they haven't been as punished as those who say they're going to miss in the future."

Verizon Communications shares fell $3.21, or 6.7%, to $44.45 Friday after the company said it expects cash-strapped customers and stiffer competition to pressure its business in coming months.

Even with Friday's declines, the S&P 500, the Dow and the Nasdaq are ended the week with solid gains, offering a respite to investors who have seen their portfolios pummeled this year. A stretch of earnings reports this week have given investors confidence to wade in and scoop up beaten-down stocks. Netflix and Tesla were among the companies that exceeded Wall Street expectations, sending their shares soaring to become two of the S&P 500's best performers this week.

Some investors say they have jumped back into the market in recent weeks to take advantage of bargains, noting that extreme bearish sentiment is often a contrarian signal. BofA Global Research this week reported "max bearish" sentiment among investors in its Bull & Bear Indicator.

"There's lots of metrics that point to negativity on equities. That's a good starting point for us and what has given us more confidence" to add to equity positions, said John Roe, head of multiasset funds at Legal & General Investment Management.