Australia

Australian shares are set to edge lower following a volatile session on Wall Street. Wednesday’s short lived rally ended for the US indices.

ASX futures were down 25 points or 0.4% at 6522 as of 7:00am on Friday, pointing to a slip at the open.

US stocks fell fast and furious Thursday, as bond-market turmoil upended broader markets and investors wrestled anew with worries about a global slowdown.

The declines jolted investors who had enjoyed a very short-lived stock rally on Wednesday. The Dow slid about 456 points, falling 1.5% and giving up much of the previous day's gains. The S&P 500 dropped 2.1%. The tech-heavy Nasdaq was down 2.8%. The three indexes finished at or near their 2022 closing lows.

"This volatility is quite breathtaking," said Peter Bermont, senior portfolio manager and managing director of Bermont Gold Wealth Advisory.

Economic data on Thursday underscored concerns about the economic outlook. The Commerce Department said the US economy shrank at an annual rate of 0.6% in the second quarter, confirming previous estimates. Mortgage rates rose to their highest level since 2007, a jump that will lock some would-be buyers out of homeownership and force others to spend far more than they were planning.

In commodity markets, Brent crude oil slipped 0.59% to $US88.79 a barrel, gold was flat at US$1,660.17.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.33% while the 10 Year fell to 3.93%. Overseas, the yield on 2 Year US Treasury notes rose to 4.19% and the yield on the 10 Year US Treasury notes was up to 3.78%.

The Australian dollar hit 64.94 US cents down from the previous close of 65.19. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 103.69.

Asia

Chinese stocks ended mixed, as gains in the medical equipment sector were offset by heavy losses in real-estate related companies. The benchmark Shanghai Composite Index edged down 0.1% to settle at 3041.20, while the Shenzhen Composite Index also fell 0.1% to 1937.20. The tech-heavy ChiNext Price Index was the only winner, rising 0.8% to end at 2333.00. Medical device and equipment makers led gains amid expectations of government support measures for the sector. Developers and property management companies extended their recent selloff amid renewed concerns over the sector's liquidity crisis, and offset the market's upward momentum.

Hong Kong stocks ended the session lower, erasing morning gains to extend a broad downturn marked since last week. The benchmark Hang Seng Index fell 0.5% to settle at 17165.87. Chinese property developers led the losses as the sector's selloff continued after major player CIFI said it had issues making cash distribution on an investment product related to one of its projects. CIFI slumped 16% to a record low, while Country Garden dived 12% and Longfor shed 7.5%. The tech sector also weighed on the market, with the Hang Seng Tech Index losing 1.2% to finish at 3482.52, close to its lowest levels since the benchmark's launch in 2020.

Japanese stocks ended higher, led by gains in technology and pharmaceutical shares, as concerns eased somewhat about borrowing costs. Rakuten Group advanced 6.1% and Shionogi climbed 5.1%. Eisai surged 14%, adding to Wednesday's 17% jump following news that its experimental drug slowed the progression of Alzheimer's disease in a clinical study. The Nikkei Stock Average rose 0.9% to 26422.05.

Europe

European stocks fell as speculation about further US interest-rate rises eclipsed relief stemming from the Bank of England's attempts to ease UK market volatility. The pan-European Stoxx Europe 600, German DAX and French CAC 40 dropped more than 1%

The data showed the US labor market is still doing well despite economic turbulence, Oanda says. "While that would ordinarily be celebrated, on this occasion that resilience could translate to stubborn inflation and more rate hikes," Oanda analyst Craig Erlam writes.

In London, the FTSE 100 on Thursday closed down 1.8% at 6,881.59 points, its lowest level since March 8, over persistent worries about the U.K. government's fiscal policy.

The U.K. index fell despite rebounding on Wednesday after the Bank of England stepped in to support the U.K. government debt market. The index's top fallers were fashion retailer Next PLC, which fell 12%, and online grocer Ocado Group PLC, which closed down 10%, with both stocks suffering from record low levels of consumer confidence in September.

North America

US stocks fell fast and furious Thursday, as bond-market turmoil upended broader markets and investors wrestled anew with worries about a global slowdown.

The declines jolted investors who had enjoyed a very short-lived stock rally on Wednesday. The Dow slid about 456 points, falling 1.5% and giving up much of the previous day's gains. The S&P 500 dropped 2.1%. The tech-heavy Nasdaq was down 2.8%. The three indexes finished at or near their 2022 closing lows.

"This volatility is quite breathtaking," said Peter Bermont, senior portfolio manager and managing director of Bermont Gold Wealth Advisory.

Economic data on Thursday underscored concerns about the economic outlook. The Commerce Department said the US economy shrank at an annual rate of 0.6% in the second quarter, confirming previous estimates. Mortgage rates rose to their highest level since 2007, a jump that will lock some would-be buyers out of homeownership and force others to spend far more than they were planning.

Even good news wasn't, really. Initial jobless claims, a proxy for layoffs, decreased to their lowest level since April, the Labor Department reported Thursday. But in the sometimes perverse logic of Wall Street, some investors said that was sending markets down too: A strong jobs sector could give the Federal Reserve more confidence to keep aggressively raising rates.

"The Fed is trying very hard to inflict pain on the job market and it's not working. That maintains the narrative that the Fed is going to have to be tighter for longer," said David Waddell, CEO & Chief Investment Strategist at Waddell and Associates.

Stocks have been under pressure all year. Decades-high inflation has thrown consumers and businesses for a loop, and the Fed and other central banks are trying to fight it with higher rates. Money managers worry that the central banks will overdo it and tip the economy into recession.

Market volatility this week has also been exacerbated by the U.K. government's efforts to get its economy back on track. Late last week, the U.K. government announced plans for unfunded tax cuts, spooking markets. The Dow on Monday joined the S&P in a bear market, defined in Wall Street parlance as a drop of 20% or more from a recent high, and both indexes continued to fall Tuesday.

On Wednesday, the Bank of England announced an emergency bond-buying program to help stabilize U.K. bond prices. That move sparked a roller-coaster day for the benchmark 10-year US Treasury note. Its yield climbed above 4% for the first time in more than a decade, only to end with its biggest one-day drop since 2009.

U.K. Prime Minister Liz Truss rattled investors with comments Thursday that she wouldn't backtrack on plans to carry out big tax cuts and spending increases funded by borrowing, even amid the turmoil in global financial markets.

"We had to take decisive action," Ms. Truss told the British Broadcasting Corp. in her first public comments since the tax plan was presented last Friday.

"Central banks remain wholly focused on inflation and taking rates higher," Mr. Turner added. "Even if that means causing recession."

The selloff Thursday spread broadly across US equity markets. All 11 sectors of the S&P 500 traded in negative territory.

CarMax was the biggest laggard on the S&P 500, down 24% after a huge earnings miss. The used-car retailer posted a quarterly profit of 79 cents a share, far less than the $1.39 expected by analysts tracked by FactSet. Bed Bath & Beyond shares also pulled back 8.9% after reporting widening losses.