Australia

Australian shares are set to open lower, after financial firms nudged the S&P 500 to a fresh record Tuesday.

ASX futures were down 0.51% or 42 points as of 8:00am on Wednesday, suggesting a lower open.

U.S. stocks ended mixed while Treasury yields rose modestly after Federal Reserve Chair Jerome Powell said more data are needed to convince officials it is time for a rate cut.

In another quiet session Monday, the S&P 500 added 0.1% and the Nasdaq Composite climbed 0.3%, both extending a run of record closes. The Dow Jones Industrial Average slipped 0.1%.

In commodity markets, Brent crude oil was down 0.9% to US$85.02 a barrel, while gold was flat at US$2,363.84.

In local bond markets, the yield on Australian 2 Year government bonds was down at 4.19% while the 10 Year yield was also down at 4.34%. US Treasury notes were mixed, with the 2 Year yield unchanged at 4.63% and the 10 Year yield up at 4.30%.

The Australian dollar was 67.40 US cents, up from its previous close of 67.39.

Asia

Chinese shares closed higher, reversing opening losses. Semiconductor and auto stocks lifted the indexes. Huizhou Desay SV Automotive rose 10% and Cambricon Technologies advanced 7.7%. BYD rose 3.1%. Foxconn Industrial Internet rose 7.6% on positive sentiment following its parent company's record 2Q revenue. Meanwhile, consumer products stocks were lower with Muyuan Foods down 2.8% and Yifeng Pharmacy Chain falling 2.95%. The benchmark Shanghai Composite Index closed 1.3% higher at 2,959.37, the Shenzhen Composite Index rose 1.7% and the ChiNext Price Index gained 1.4%.

Hong Kong shares ended flat as investors look for new catalysts. Sentiment could be cautious ahead of key Chinese economic data due Wednesday, with traders also watching for more policy hints about potential measures at the upcoming Third Plenum political summit. Consumer stocks lead the losses, with Anta Sports falling 2.3% and Li Ning dropping 3.0%. China National Building Material slid 14% after the company guided for a swing to a loss in 1H. Gainers include BYD Electronic, which added 6.4%, Lenovo, which rose 3.5%, and SMIC, which was 3.4% higher. The Hang Seng Index ended flat at 17,523.23 and the Hang Seng Tech Index rose 1.0% to 3,600.90.

The Nikkei Stock Average ended 2.0% higher at 41,580.17, hitting a new record closing high as a weak yen raises expectations for earnings growth. Hopes also continue for the Fed's potential rate cuts ahead of Chair Jerome Powell's congressional testimony later in the day. Electronics and tech stocks lead gains. Sony Group climbed 5.0% and SoftBank Group gained 4.1%. The 10-year Japanese government bond yield was down 1.5 basis points at 1.070%.

India's Sensex rose 0.5% to close at a record high of 80,351.64, led by auto stocks. Markets are watching for Fed Chair Powell's testimony before the U.S. Senate committee later today for further cues on possible rate cuts, and he will likely face pressure from lawmakers who are growing impatient for the Fed to cut interest rates, the UOB Global Economics & Markets Research team said in a note. Among advancers, Maruti Suzuki India rose 6.6%, Mahindra & Mahindra gained 2.5% and Tata Motors was 1.2% higher. Among decliners, Reliance Industries lost 0.7%, Kotak Mahindra Bank was 0.6% lower and Bajaj Finance shed 0.4%.

Europe

Stocks in the U.K. slipped Tuesday, as the FTSE 100 Index dropped 0.7% to 8,139.81.

Among large companies, Indivior PLC posted the largest decline, dropping 36%, followed by shares of Hays PLC, which dropped 6.0%. Shares of Watches of Switzerland Group PLC dropped 5.0%.

Aston Martin Lagonda Global Holdings PLC was the biggest gainer during the session, surging 5.6%, and Severn Trent PLC surged 2.5%. Energean PLC rounded out the top three movers on Tuesday, as shares gained 2.3%.

In other parts of Europe, markets closed lower, with the STOXX Europe 600 Index down 0.9% at 511.76, Germany's DAX slipped 1.2% to 18,236.19 and France's CAC 40 slipped 1.6% to 7,508.66.

North America

Financial firms nudged the S&P 500 to a fresh record Tuesday, a rare day lately when a sector other than technology led the broad stock index higher.

Shares of Goldman Sachs Group and Intercontinental Exchange ended the session at all-time highs, while another six banks and finance companies in the S&P 500 closed at their highest price in at least a year. JPMorgan, Citigroup, and Bank of America are among the big firms scheduled to disclose spring-quarter earnings on Friday.

The S&P 500 gained less than 0.1% to set its 36th new record this year. The tech-heavy Nasdaq Composite added a little more than 0.1%, to also notch a new all-time high. The Dow Jones Industrial Average declined 0.1%, or about 53 points.

Tuesday started out as another day with chip makers and other firms with an angle on the artificial-intelligence boom leading the way. Technology stocks turned lower, while Treasury yields and shares of banks rose following Federal Reserve Chairman Jerome Powell's midmorning remarks to Congress.

Powell told the Senate Banking Committee that recent employment data suggest the labor market has "cooled considerably." He said the central bank is weighing the potential that high rates wreck the economy and cause excessive unemployment against the risk of reigniting inflation with rates cut too soon.

Lindsay Rosner, head of multisector investing at Goldman Sachs Asset Management, said the Fed has successfully brought inflation down toward its targeted levels without too much damage to the economy. She said the central bank will likely cut rates in September, as the market has priced in.

"It is absolutely a soft landing," she said. "That may not have been something thought possible by many market participants in the beginning of the year, but as the data has come through that is absolutely what we're seeing."

Treasury yields rose following Powell's remarks but eased in afternoon trading. The yield on benchmark 10-year notes ended Tuesday at 4.297%, up from 4.267% on Monday. Yields rise as prices fall.

Investors and central bankers will get the next read on inflation Thursday when the Labor Department is scheduled to publish consumer prices for June. On Friday, they will begin to get a look at how America's biggest companies fared during the spring quarter when earnings season kicks off with financial reports from big banks.

Bank of America Securities analysts said they expect the second quarter to be the first since 2022's fourth quarter in which earnings per share grow for the companies in the S&P 500 outside of the so-called Magnificent Seven tech firms driving this year's rally.

"Growth is broadening out and so should the market," they wrote in a note to clients.

When and if the so-called Other 493 join the top-heavy rally has become a key focus for money managers.

"It's extremely unsettling that markets continue to make new highs while the average stock is languishing," said Hans Olsen, chief investment officer at Fiduciary Trust. "That is not a sign of a healthy market nor a market that can durably move higher without some sort of correction."

U.S.-listed shares of BP shed 4.8% after the British energy giant warned that weak oil trading and lower refining margins would hurt earnings and that it would book an impairment of up to $2 billion for the second quarter.

Railroad CSX lost 2.7% after Wall Street analysts trimmed earnings estimates. "Rail volumes continue to track below pre-Covid levels," analysts with TD Cowen wrote in a note to clients.