Australia

Australian shares are pointing higher this morning following gains on Wall Street. Promising US inflation data boosted hopes that the Federal Reserve’s policy-tightening campaign will succeed in cooling price pressures without sinking the economy. Meanwhile, the Bank of Japan surprised investors and sent Japanese stocks lower after hiking the 10 Year government bond yield.

ASX futures were 22 points or 0.3% higher as of 6:00am on Saturday, suggesting a positive open.

US stocks rebounded Friday to cap off a week of gains, as soft inflation data boosted investor sentiment and shares of big tech companies powered major indices higher.

The S&P 500 rose 1.0%. The Dow Jones Industrial Average about 177 points, or 0.5%. The Nasdaq Composite jumped 1.9%. Canadian stocks also gained, with the S&P/TSX Composite advancing 0.7%.

Each of the three major US indices locked in weekly gains, with the S&P 500 and Dow both logging a third consecutive positive week. The Dow on Wednesday clinched a winning streak of 13 trading days, its longest streak since 1987.

This year's market rally has picked up steam as the US economy has proven more resilient than expected, bolstering investor optimism in the likelihood of a soft landing in which the Federal Reserve gets inflation under control without triggering a recession. The S&P 500 is now up 19% in 2023, after falling 19% in 2022.

In commodity markets, Brent crude oil added 0.7% to US$84.80 a barrel while gold also gained 0.7% to US$1,958.96.

Australian government bonds were higher, with the 2 Year yield climbing to 3.94% and the 10 Year yield edging up to 4.07%. US Treasury notes were also higher, with the 2 Year yield increasing to 4.87% and the 10 Year yield rising to 3.95%.

The Australian dollar dipped to 66.52 US cents from its previous close of 67.08. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged up to 96.18.

Asia

Chinese shares ended higher, buoyed by property developers and the financial sector. Beijing's latest property stimulus policy boosted confidence in the resumption of the country’s economic recovery. China's housing minister Ni Hong has sought cuts on home mortgage rates and down-payment ratios for first-time home buyers, state media reported late Thursday. China Vanke Co. gained 3.4% and Poly Developments & Holdings Group added 5.0%. Among financials, Citic Securities and Capital Securities were both up 10%, the maximum daily rise permitted in China. The benchmark Shanghai Composite Index closed 1.8% higher at 3275.93. The Shenzhen Composite Index rose 1.2% and the tech-heavy ChiNext Price Index gained 1.6%.

Hong Kong shares ended higher, led by technology and real estate stocks, with sentiment boosted by hopes that the Federal Reserve will soon conclude is rate-hiking campaign. The Hang Seng Tech Index surged 2.9% as Sunny Optical Technology gained 8.9% and Lenovo added 7.7%. The Hang Seng Mainland Properties Index rose 2.5% after Beijing's latest property stimulus policy. Longfor rose 8.9% and Country Garden gained 5.0%. The benchmark Hang Seng Index rose 1.4% to settle at 19916.56.

Japanese stocks ended lower, dragged by falls in electronics and real-estate shares, as government bond yields climbed after the Bank of Japan loosened its grip on the yield curve. Renesas Electronics dropped 4.9% and property developer Mitsui Fudosan shed 1.6%. Meanwhile, Mitsubishi UFJ Financial Group gained 2.5% and Dai-ichi Life climbed 7.2% as the 10 Year Japanese government bond yield rose 0.12% to 0.555%. During the day, the yield hit 0.575%, its highest level since September 2014. The Nikkei Stock Average fell 0.4% to 32759.23.

India's benchmark Sensex index edged 0.2% lower to close at 66160.20 in a possible position adjustment ahead of the weekend. Market sentiment seems to have soured amid jitters in the bond markets, commented Tina Teng, markets analyst at CMC Markets, noting the overnight surge in the US 10 Year Treasury yield. A mixed bag of companies led losses on the benchmark index, with Bajaj Finserv falling 1.75%, Tata Motors dropping 1.7%, and HCL Technologies down 1.3%. Meanwhile, NTPC climbed 4.0% and Power Grid Corp. of India added 3.05%.

Europe

European stocks had mixed results following a similarly uncertain session in Asia, though Wall Street appeared set to rise. The pan-European Stoxx Europe 600 dipped 0.1%, the French CAC 40 added 0.2% and the German DAX climbed 0.4%.

"In a surprising move, the Bank of Japan decided to adjust its yield-control policy," IG analysts wrote. "This unexpected move has left investors pondering whether it's simply a technical adjustment to the yield-curve-control policy, or the beginning of a tightening cycle."

The United Kingdom’s FTSE 100 closed flat on Friday, rising only 2 points to 7694. A drop in mining and oil-exposed stocks offset a positive round of corporate earnings. AstraZeneca was the index's main lifter, with shares rising 3.35% after the pharma company reported a strong 2Q set of results and signed a deal with Pfizer to acquire a portfolio of rare disease gene therapies, CMC Markets analyst Michael Hewson said in a note.

British Airways owner IAG outperformed the British index, gaining 6.6% after reporting a record 1H operating profit and a rise in net profits, Hewson added. Standard Chartered Bank shares closed up 4.0% on the back of a solid 2Q, a share buyback program and a guidance lift.

North America

US stocks rebounded Friday to cap off a week of gains, as soft inflation data boosted investor sentiment and shares of big tech companies powered major indices higher.
The S&P 500 rose 1.0%. The Dow Jones Industrial Average about 177 points, or 0.5%. The Nasdaq Composite jumped 1.9%. Canadian stocks also gained, with the S&P/TSX Composite advancing 0.7%.

Each of the three major US indices locked in weekly gains, with the S&P 500 and Dow both logging a third consecutive positive week. The Dow on Wednesday clinched a winning streak of 13 trading days, its longest streak since 1987.

This year's market rally has picked up steam as the US economy has proven more resilient than expected, bolstering investor optimism in the likelihood of a soft landing in which the Federal Reserve gets inflation under control without triggering a recession. The S&P 500 is now up 19% in 2023, after falling 19% in 2022.

"The market is really starting to price in this idea that we can actually hit a soft landing that seemed so elusive just a couple months ago," said Matt Bush, managing director of macroeconomics and investment research at Guggenheim Partners.

Friday wrapped up a packed week for markets that included the Fed's latest policy meeting, fresh economic data and many high-profile quarterly earnings reports.

The Fed this week raised interest rates by a widely anticipated quarter percentage point to the highest level in 22 years. Fed Chair Jerome Powell said the central bank would decide whether to keep lifting rates in future meetings based on how the economy -- and in particular, inflation -- is faring.

New economic reports released Friday showed a cooling in price and pay pressures. The personal-consumption expenditures price index (PCE), the Fed's preferred inflation gauge, rose 3% in June from the year earlier, down from a 3.8% rise the prior month, the Commerce Department reported Friday. A separate report on wages released Friday from the Labor Department showed a slowdown in employer spending on compensation.

Investors also parsed corporate earnings results at the midpoint of the second-quarter reporting season. With second-quarter results reported from about half of the companies in the S&P 500, 80% have topped analysts' consensus earnings estimates, according to FactSet. That is above the five-year average of 77%.

"The fact that earnings are actually turning out not to be as bad as feared is also supporting the market," said Erik Ristuben, chief investment strategist at Russell Investments.

Shares of Meta Platforms and Alphabet both rose Friday and gained more than 10% this week after each company reported accelerating sales growth. Those mega-cap tech stocks are heavily weighted in the S&P 500 and boosted the communication services sector, which was the best-performing segment of the broad stock index on Friday.

Intel gained 6.6% after it reported a return to profit on the back of a resurgent PC market. Meanwhile, Chevron and Exxon Mobil shed 0.5% and 1.2%, respectively, after the oil giants' quarterly profits dipped from last year's records.

In other corporate news, Ford shares dropped 3.4% after the company warned of steeper-than-expected losses in its electric-vehicle business. Tesla rose 4.2% and Rivian added 3.4%.