Australia

Australian shares are set to edge lower following a dip on Wall Street after another batch of poor corporate earnings reports. ASX futures were down 20 points at 6685 as of 7:00am on Friday, pointing to a slip at the open.

US stocks moved lower Thursday as investors weighed corporate earnings and the question of how aggressively central banks will raise interest rates to moderate inflation.

The S&P 500 fell 0.8% near the end of the trading day. The tech-focused Nasdaq Composite dropped about 0.6% and the Dow Jones Industrial Average lost 0.3%, or 91 points.

Major central banks are expected to further lift interest rates during coming meetings as price pressures show little signs of easing. Inflation figures in the UK and Canada came in above expectations this week. Germany's producer prices rose strongly in September from a year earlier, driven by higher energy prices, the German statistics office Destatis said Thursday.

In commodity markets, Brent crude oil gained 0.09% to US$92.49 a barrel, gold edged down 0.25% to US$1,625.44.

In local bond markets, the yield on Australian 2 Year government bonds rose to 3.50% while the 10 Year rose to 4.05%. Overseas, the yield on 2 Year US Treasury notes rose to 4.61% and the yield on the 10 Year US Treasury notes rose to 4.23%.

The Australian dollar hit 62.76 US cents up from the previous close of 62.67. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies closed 0.06% lower to 104.80.

Asia

Chinese shares ended lower, dragged by automakers and consumer goods companies as Covid-19 infections in Beijing swelled to their highest level in four months. White goods maker Midea Group fell 1.9%, dairy producer Inner Mongolia Yili Industrial Group slid 6.8% and Kweichow Moutai fell for the second day with a 0.3% loss. Electric-car battery maker CATL slid 3.8% while BYD Co. was 1.5% lower, following Tesla's 3Q sales miss. Among the gainers were chip stocks. SMIC rose 2.2% and Advanced Micro-Fabrication Equipment rose 16% as China pushes for the localization of its chip industry. The Shanghai Composite Index declined 0.3% to 3035.05, the Shenzhen Composite Index dropped 0.5% and the ChiNext Price Index was 1.0% lower.

Hong Kong's Hang Seng Index slipped 1.4% to 16280.22, its lowest closing level since October 2011, tracking Wall Street's drop overnight. However, declines on the HSI were pared on a media report that China is debating a possible reduction in the Covid-19 quarantine period for inbound travelers. Losses on the HSI were led by tech stocks. NetEase fell 8.6%, Baidu lost 8.1% and Tencent shed 4.75%. The Hang Seng Tech Index closed 2.4% lower at 3120.83. Sands China declined 1.4% after the casino operator reported a wider 3Q net loss. Meanwhile, Hansoh Pharmaceutical Group rose 3.0% and CK Asset Holdings was up 2.1%.

Japanese stocks ended lower, dragged by falls in electronics stocks, as concerns persist over policy tightening by major central banks. Hoya Corp. dropped 3.5% and Renesas Electronics lost 2.4%. Meanwhile, Shinsei Bank jumped 8.2% following a report that SBI Holdings is considering delisting the banking unit. The Nikkei Stock Average fell 0.9% to 27006.96.

Europe

European stocks rose as markets shrugged off UK political turbulence amid upbeat trading on Wall Street. The Pan-European Stoxx 600, FTSE 100 and German DAX gained about 0.3% and the CAC 40 advanced 0.7%.

UK Prime Minister Liz Truss resigned today following economic and political chaos caused by her tax-cutting budget. "Truss's great political gamble has spectacularly backfired, but not before wreaking significant damage on the UK economy," Hargreaves Lansdown analyst Susannah Streeter writes. "It will take considerable time before the risk premium attached to UK assets fades away, following the financial nervous breakdown which followed the mini-budget.

The FTSE 100 pared earlier losses to stand 0.2%, or 14 points, higher at 6938 following the resignation of UK Prime Minister Liz Truss. Banking, property, retail, oil and mining stocks lead the index higher while utility and drug stocks are among the largest losers. Brent crude gains 1.7% to $93.94 a barrel. "Market reaction to Truss's resignation has been very muted," Royal London Asset Management's head of multi asset, Trevor Greetham, writes, adding that it wasn't a big surprise. "The best outcome for markets would be a rapid rallying of the parliamentary Conservative Party around a single candidate who would validate [Treasury chief Jeremy] Hunt's approach and the timing of the Oct. 31 report from the Office for Budget Responsibility."

North America

US stocks moved lower Thursday as investors weighed the latest batch of corporate earnings and the question of how aggressively central banks will raise interest rates to moderate inflation.

The S&P 500 fell 0.8% near the end of the trading day. The tech-focused Nasdaq Composite dropped about 0.6% and the Dow Jones Industrial Average lost 0.3%, or 91 points.

Major central banks are expected to further lift interest rates during coming meetings as price pressures show little signs of easing. Inflation figures in the UK and Canada came in above expectations this week. Germany's producer prices rose strongly in September from a year earlier, driven by higher energy prices, the German statistics office Destatis said Thursday.

The Federal Reserve has raised interest rates five times this year and is likely to increase its benchmark federal-funds rate by another 0.75 percentage point at its meeting next month as it tries to bring down high inflation.

"At the moment, we keep getting upside surprises on inflation everywhere you look," said Hugh Gimber, a strategist at J.P. Morgan Asset Management. "No one really has a good grasp yet of where the central banks -- particularly the Fed -- are going to be able to stop."

The uncertainty around both inflation and the extent of the Fed's monetary tightening is at the core of what's been weighing on markets in recent days, according to Arthur Laffer Jr., president of Laffer Tengler Investments, a Nashville, Tenn.-based registered investment adviser that manages more than $1 billion in assets.

"Markets are a little bit stunned that the Fed has shown that it's going to stay the course at least through year-end," Mr. Laffer said. "If these inflation numbers don't come down and they don't come down consistently over several months, you are not going to get a pivot anytime soon."

Investors are also trying to assess if higher inflation and tightening financial conditions will feed through to earnings season. J.P. Morgan's Mr. Gimber said he is paying attention to how companies are affected by wage pressure and higher input costs and if those costs can be passed on to consumers.

Stocks have been volatile in recent sessions, buoyed by a batch of mixed though better-than-expected earnings results. Still, some investors believe that earnings expectations are too high across the board and a downward recalibration is likely ahead.

"There's probably a bit more limited downside in the market even if earnings expectations come down," said Ralph Bassett, head of investments, Americas at Abrdn. "We just don't think we're at that process where estimates bottomed and valuation looks extremely compelling. We think we're just likely to witness a lot of volatility over the next six months."

Tesla shares fell 6.65% after the electric-car maker cut its full-year growth expectations. Whirlpool and Snap are slated to post quarterly results after the market close.

Shares of AT&T added 7.8% after the telecommunications giant raised its outlook for profit and wireless revenue.

Labor Department data showed that 214,000 workers filed for unemployment benefits in the week ended Oct. 15, down from the week prior. The National Association of Realtors reported sales of previously owned homes fell for an eighth straight month to 4.7 million in September, the lowest level since May 2020.