Australia

Australian shares are set to open lower, despite US indexes all rising led by gains in industrials stocks.

ASX futures were down 0.2% or 14 points as of 8:00am on Friday, suggesting a slightly lower open.

All three major U.S. stock indexes rose to new records Thursday, boosted by investors' growing conviction that the post-Covid surge in borrowing costs is coming to an end soon.

The Dow Jones Industrial Average led the way, adding 0.7%, or 269 points to 39,781.37. Industrial and bank stocks led the S&P 500 0.3% higher to 5,241.53, and the tech-heavy Nasdaq Composite gained 0.2% to 16,401.84.

In commodity markets, Brent crude oil was down 0.5% to US$85.54 a barrel, while gold was down 0.3% at US$2,181.02.

In local bond markets, the yield on Australian 2 Year government bonds was up at 3.84% while the 10 Year yield was also up at 4.09%. US Treasury notes were mixed, with the 2 Year yield up at 4.64% and the 10 Year yield unchanged at 4.27%.

The Australian dollar hit 65.68 US cents down from its previous close of 65.85. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 98.68.

Asia

Chinese shares ended lower, diverging from broad gains across other regional markets fueled by Fed rate-cut hopes fueled. Hints from China's central bank that more monetary easing is in the pipeline failed to provide much of a catalyst. Consumer durables weighed the most, with Midea dropping 2.15%. China Mobile shed 1.0%. Gainers included New Hope Liuhe and Chongqing Changan Automobile, which both rose 5.1%. The benchmark Shanghai Composite Index slipped 0.1% to 3077.11, the Shenzhen Composite Index was 0.1% lower, while the ChiNext Price Index lost 0.6%.

Hong Kong's Hang Seng Index rose 1.9% to close at 16863.10, tracking gains across most regional equity markets. The U.S. FOMC was more dovish than pre-meeting expectations, and with this event risk over, positive momentum in equities should continue, as focus returns to earlier themes such as artificial intelligence, Nomura analysts say in a commentary. Shares may have also been boosted by China's central bank hinting at more monetary easing ahead. The best performers on the benchmark index include China Hongqiao Group, which rose 5.8%; Haidilao International, which added 5.5%; and Longfor Group Holdings, which was up 5.6%.

The Nikkei Stock Average closed 2.0% higher at a new record high of 40815.66 amid growing hopes for Fed rate cuts later this year. Among the biggest big-cap movers, Tokyo Electron Ltd. gained 5.5%, SoftBank Group climbed 5.0% and Mitsui & Co. advanced 5.0%. The 10-year Japanese government bond yield rose one and a half basis points to 0.740%. Investors are focusing on economic data and their policy implications.

Indian shares closed higher, tracking peers in Asia, after the Fed stuck to its guidance for three interest rate cuts this year. Indian equities continue to be attractive to domestic and overseas investors, Axis Securities portfolio manager Nishit Master said in an email. "We believe that markets are now fairly well-placed to generate low-teen returns in the coming year after the recent healthy correction we witnessed, especially in the small and mid-cap universe," he said. NTPC rose 3.55%, leading gains. The steel sector advanced, with Tata Steel up 3.0% and JSW Steel rising 2.4%. Rail Vikas Nigam was 2.2% higher after wining a contract. Among the few decliners, Bharti Airtel was down 0.8% and ICICI Bank dropped 0.2%. The benchmark Sensex was 0.75% higher at 72641.19.

Europe

European shares closed higher, with the STOXX Europe 600 and DAX 40 up 0.9% to 509.77 and 18,179.25 respectively, and the CAC 40 rising 0.2% to 8,179.72.

The FTSE 100 index closed Thursday up 1.9% at 7882 points, with just a few stocks in the negative, lifted by miners and the consumer-discretionary sector amid increasing hopes of the end to the rate-hikes cycle, XTB research director Kathleen Brooks says in a note. "Overall, the BOE was more dovish than expected because no MPC members are voting for rate hikes. This is an historic shift at the BOE for this hiking cycle, and suggests that we are moving to a new phase of monetary policy for the BOE and that lower interest rates are coming," she says. 3i Group led the risers, with shares closing up 8.7%, after the international investment manager said it had a strong start of 2024. Next PLC followed the list of outperformers, up 6.7% after the group backed its growth guidance.

North America

All three major U.S. stock indexes rose to new records Thursday, boosted by investors' growing conviction that the post-Covid surge in borrowing costs is coming to an end soon.

The Dow Jones Industrial Average led the way, adding 0.7%, or 269 points to 39,781.37. Industrial and bank stocks led the S&P 500 0.3% higher to 5,241.53, and the tech-heavy Nasdaq Composite gained 0.2% to 16,401.84.

Stock indexes in Europe and Japan also notched all-time highs Thursday. The Bank of England held its key interest rate steady and Switzerland became the first rich country to reduce interest rates since central banks mounted a historic campaign two years ago to tame inflation.

The Swiss National Bank's cut as well as comments from central bank officials in the U.S. and Europe have indicated that rates are set to decline across the developed world despite signs that inflation is stickier than expected.

The Federal Reserve on Wednesday kept its benchmark fed-funds rate at 23-year highs between 5.25% and 5.5%, though a narrow majority of Fed officials reaffirmed projections for three rate cuts this year. That sent the major U.S. stock indexes to simultaneous records for the first time since November 2021, before the central bank began raising rates.

"The outcome makes us more confident in our expectation for the first cut to come in June," said Carl Riccadonna, chief U.S. economist at French bank BNP Paribas.

Marcus Frampton, chief investment officer of the Alaska Permanent Fund, said he believes inflation has cooled even more than Labor Department data suggest based on the rent at the apartment buildings that the fund owns around the country.

While year-over-year comparisons make rents look high in the official data, they have lately been stagnant or declining at many of the Alaska fund's properties, Frampton said.

"It seems to me that they've solved the inflation problem," he said. "On the margin we're shifting more to fixed income because it seems like the Fed is going to be able to lower rates and the stock market seems quite expensive."

The $78 billion fund has skewed its stock portfolio toward value shares and away from growth equities and built up positions in gold miners and beaten-down Chinese shares, he said.

Phil Orlando, chief equity strategist at Federated Hermes, said the asset manager has prepared for stocks trading at relatively low multiples of expected future earnings to take the baton from the big technology firms that have led the rally.

Orlando said he believes this year's rally has been too sharp, and that he expects stocks to fall once the Fed does lower rates and slump until after the U.S. presidential election -- when they should rally anew.

"While things look all hunky-dory now, I think there's a risk of a soft patch coming over the summer and fall," he said.

Economic data released Thursday supported views that the economy is strengthening.

Sales of existing homes rose 9.5% in February, handily beating the expectations of analysts who had expected a decline. Home sales remain below what was typical prior to the Fed raising rates, but the increase to the highest level of activity in a year suggests the market is adapting to higher borrowing costs.

The Conference Board said its Index of Leading Economic Indicators rose 0.1% last month, the first increase since February 2022. Economists polled by The Wall Street Journal had forecast a 0.1% decline.

Weekly unemployment data from the Labor Department showed initial jobless claims decreased and fell below Wall Street forecasts.

Artificial intelligence powered some of the day's biggest gains. Micron Technology paced the S&P 500, rising 14% after the memory-chip company swung to a surprise profit and offered a much rosier outlook than analysts had expected, thanks to AI server demand rippling through the market for data storage.

The broad index's newest member, Super Micro Computer, rebounded 8.4% after tumbling earlier this week following a failed stock offering. Chip and software maker Broadcom added 5.6% after impressing analysts at an AI event Wednesday.

Accenture was the index's worst performer, dropping 9.3% after quarterly results disappointed investors and highlighted ongoing struggles in the consulting industry.

Shares of the social-media company Reddit surged 48% in their stock market debut, a sign that investor enthusiasm could be returning for initial public offerings.