Australia

Australian shares are set to open flat following a dip on Wall Street as investors cautiously await the US Fed’s rate decision this week.

ASX futures were up 5 points or 0.07% at 6978 as of 7:00am on Wednesday, pointing to markets opening flat.

US stocks slipped Tuesday as investors considered the trajectory of interest-rate increases ahead of the Federal Reserve's policy decision on Wednesday. The S&P 500 eased 15.88 points, or 0.4%, to 3856.10 after opening the session higher. The Dow Jones Industrial Average lost 79.75 points, or 0.2%, to 32653.20. The Nasdaq Composite shed 97.30 points, or 0.9%, at 10890.85.

The Fed's quest to tame inflation by rapidly lifting interest rates has bruised stocks for much of the year. The S&P 500 is down 19% in 2022, while the Dow industrials have lost about 10%.

In recent weeks, however, the major indexes have rebounded due in part to hopes that the Fed could begin easing its monetary tightening into the end of the year. The Dow closed out October with its best monthly performance since 1976. It rose 14% during the month, while the S&P 500 ended 8% higher.

A tight labour-market reading Tuesday morning clouded the outlook. The major averages turned lower after the latest numbers on job openings came in higher than expected, stoking fears that the Fed will keep raising interest rates aggressively due to the hot labour market. US job openings jumped to 10.7 million in September, the Labor Department reported.

"These days, good news is bad news. We probably would prefer to see some slowdown in the economy in order for inflation to start to come down and for the Fed to be able to to slow down its actions and rhetoric," said Marco Pirondini, head of equities and portfolio manager at Amundi US.

The central bank is widely expected to announce another 0.75-percentage-point rate increase at the end of its two-day monetary policy meeting. Some Fed officials have signalled they could consider a smaller half-point rate lift in December.

Comments from Federal Reserve Chairman Jerome Powell following the end of the meeting Wednesday could offer clues about whether the central bank will adjust its course on monetary policy.

In commodity markets, Brent crude oil gained 1.84% to US$94.52 a barrel, gold gained 0.80% to US$1,647.26.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.18% while the 10 Year rose to 3.76%. Overseas, the yield on 2 Year US Treasury notes rose to 4.55% and the yield on the 10 Year US Treasury notes rose to 4.05%.

The Australian dollar hit 63.96 US cents up slightly from the previous close of 63.95. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 103.60.

Asia

Chinese shares rallied on rumours circulating on social media that China is preparing to loosen Covid-19 restrictions in March 2023, according to market watchers. Most stocks were higher with travel companies, the consumption sector and food producers leading the gainers. BTG Hotels Group rose 8.7% and China Tourism Group Duty-Free increased 10%; liquor-maker Kweichow Moutai rose 8.3%, ending its recent losing streak. The Shanghai Composite Index rose modestly in early trade and accelerated higher in the afternoon to end 2.6% higher at 2977.56. The Shenzhen Composite Index was up 3.0% and the ChiNext Price Index gained 3.2%.

Hong Kong's Hang Seng Index rose 1.7% to 14934.99 in early trade, rebounding from Monday's losses and starting the month on a positive note after losing 15% in October. The market broadly strengthens, with pharma and tech stocks leading gains. CSPC Pharma and Sino Biopharma are each up more than 4%, while Meituan gains 3.6% and Alibaba Group adds 2.8%. Chinese property developers are mixed amid a grim industry outlook. CIFI Holdings slumps 21% after the developer said it has suspended payment on offshore debt following failed talks with creditors. Country Garden Holdings is up 3.0% despite a ratings downgrade by Fitch Ratings, while Longfor Group drops 4.9% after Monday's 24% slide.

In Japan, the Nikkei Stock Average closed 0.3% higher at 27678.92 amid continued expectations for earnings growth. Aviation stocks were higher, with JAL rising 1.0% and ANA advancing 2.5%. Japan Tobacco Inc. shares rose 9.5% after the company posted strong quarterly results thanks to higher sales and product-price increases. Toyota Motor fell 1.9% after its 2Q net profit missed analysts' expectations. USD/JPY was last at 148.16 compared with 148.74 late Monday in New York. The 10-year Japanese government bond yield rose half-a-basis point to 0.245%.

Europe

European stocks rose after mostly upbeat Asia trading and ahead of an expected higher U.S. open. The Pan-European Stoxx Europe 600, French CAC 40 and German DAX gain more than 1%.

The FTSE 100 Index closed Tuesday up 1.3%, or 91.6 points, to 7186, leading its European peers and supported by the commodity sector and a surge in Ocado's shares. Mining stocks benefited from an increase in commodities prices such as iron, copper and nickel as investors are willing to overlook continued recession and Chinese lockdown concerns, senior market analyst at IG Joshua Mahony says in a note. Anglo American, Glencore and Antofagasta were among the biggest blue-chip risers, increasing 6%, 4.9% and 4.7%, respectively. However, online grocer and retail technology specialist Ocado lead the gains with a 40% increase after the group secured a deal for its warehousing-technology services from a retailer trading in South Korea. Rentokil lead the falls, down 4.3%, after reporting lower third-quarter disinfection-service sales.

North America

US stocks slipped Tuesday as investors considered the trajectory of interest-rate increases ahead of the Federal Reserve's policy decision on Wednesday.

The S&P 500 eased 15.88 points, or 0.4%, to 3856.10 after opening the session higher. The Dow Jones Industrial Average lost 79.75 points, or 0.2%, to 32653.20. The Nasdaq Composite shed 97.30 points, or 0.9%, at 10890.85.

The Fed's quest to tame inflation by rapidly lifting interest rates has bruised stocks for much of the year. The S&P 500 is down 19% in 2022, while the Dow industrials have lost about 10%.

In recent weeks, however, the major indexes have rebounded due in part to hopes that the Fed could begin easing its monetary tightening into the end of the year. The Dow closed out October with its best monthly performance since 1976. It rose 14% during the month, while the S&P 500 ended 8% higher.

A tight labour-market reading Tuesday morning clouded the outlook. The major averages turned lower after the latest numbers on job openings came in higher than expected, stoking fears that the Fed will keep raising interest rates aggressively due to the hot labour market. US job openings jumped to 10.7 million in September, the Labor Department reported.

"These days, good news is bad news. We probably would prefer to see some slowdown in the economy in order for inflation to start to come down and for the Fed to be able to to slow down its actions and rhetoric," said Marco Pirondini, head of equities and portfolio manager at Amundi US.

The central bank is widely expected to announce another 0.75-percentage-point rate increase at the end of its two-day monetary policy meeting. Some Fed officials have signalled they could consider a smaller half-point rate lift in December.

Comments from Federal Reserve Chairman Jerome Powell following the end of the meeting Wednesday could offer clues about whether the central bank will adjust its course on monetary policy.

"This recent rally sets us up for a bit of a disappointment if we don't get language on a pivot. There's a good chance that we end up down on Powell's statements tomorrow," said Liz Young, head of investment strategy at SoFi.

Investors also parsed the latest corporate earnings updates. Uber shares rose $3.18, or 12%, to $29.75 after the ride-sharing company reported that revenue climbed last quarter.

This earnings season has seen mixed results from America's largest corporations. Some sectors have fared better than feared amid the dual threats of rising interest rates and inflation. Several bellwether technology firms, however, reported disappointing results and are suffering under higher rates.

Overall, third-quarter earnings of companies in the S&P 500 are set to grow 3% from the year before, according to FactSet figures blending actual results and estimates for firms yet to report. With about 62% of index constituents having reported earnings as of Tuesday's close, 72% have posted results that beat analyst estimates, compared with the five-year average of 77%.

Analysts are marking down their estimates for fourth-quarter and 2023 profits as the business environment gets tougher. Consensus fourth-quarter earnings growth expectations fell from around 9% at the end of June to less than 1%, according to FactSet.

Recent stock-market gains are likely to be temporary as the lagging effect of global interest-rate rises and high inflation begins to bite early next year, said Hani Redha, a portfolio manager at PineBridge Investments.

"We are in the phase where there is still hope that we can get through this mess, with all these very significant distortions, without too much pain -- hope springs eternal," Mr. Redha said. "The path to a recession can often look like a soft landing," he said, referencing a situation in which interest-rate increases slow the economy, but avoid creating a recession.