Australia

Australian shares are set to edge after Wall Street ended the trading session mixed. The Dow Jones Industrial Average, which entered a bear market on Monday, fell again Tuesday, but the Nasdaq was up.

ASX futures were down 44 points or 0.7% at 6462 as of 7:00am on Wednesday, pointing to a slip at the open.

US stocks finished mixed Tuesday after swinging between gains and losses as investors parsed a spate of economic data and comments from Federal Reserve officials.

All three indexes spent much of the morning in the green, then slipped by midday. The Dow Jones Industrial Average, which entered a bear market on Monday, fell 0.4% Tuesday as of 4 p.m. ET. The broad S&P 500 slipped 0.2%, closing at its lowest level of the year for the second day in a row. The technology-heavy Nasdaq Composite was up 0.25%.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, reaffirmed the central bank's resolve to bring down persistent and elevated inflation in a Tuesday interview with The Wall Street Journal. "There's a lot of tightening in the pipeline," Mr. Kashkari said, adding that the Fed is "committed to restoring price stability" but also recognizes " there is a risk of overdoing it."

In commodity markets, Brent crude oil rose 2.51% to $US86.17 a barrel, gold edged up 0.42% to US$1,629.20.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.43% while the 10 Year rose to 4.02%. Overseas, the yield on 2 Year US Treasury notes rose to 4.29% and the yield on the 10 Year US Treasury notes was up to 3.96%

The Australian dollar hit 64.24 US cents down from the previous close of 64.54. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 105.16.

Asia

Chinese shares ended higher, supported by liquor makers and travel-related sectors, as investors looked forward to stronger consumption during the upcoming National Day holiday at the start of October. The three major airlines Air China, China Eastern Airlines and China Southern Airlines rose 4.5%-5.4%, while China Tourism Group Duty Free gained 4.1%. Liquor makers also advanced, with Wuliangye Yibin 5.4% higher and Kweichow Moutai adding 1.3%. The Shanghai Composite Index added 1.4% to 3093.86, rebounding from Monday's four-month low closing. The Shenzhen Composite Index climbed 2.1% and the ChiNext Price Index was 2.2% higher.

Hong Kong's Hang Seng Index ended flat at 17860.31, up 5.17 points, with gains in consumer-related sectors offsetting losses in electronics. Airlines, restaurants and travel services providers rose, tracking the A-share market, with the upcoming National Day holiday in October lifting hopes of a boost in consumption. Hot-pot chain operator Haidilao jumped 6.4%, Air China gained 5.8% and Tongcheng Travel advanced 7.6%. Meituan, which offers hotel and restaurant booking services, outperformed the tech sector with a 4.0% increase, while Alibaba Group lost 1.0%. Electronics shares have weakened amid a sluggish smartphone demand, with Sunny Optical down 2.2%.

Japanese stocks ended higher, led by gains in game, food and consumer goods stocks, following recent market selloffs caused by concerns about policy tightening by major central banks. Konami Group gained 4.0%, Suntory Beverage & Food climbed 2.2% and Kao added 2.5%. The Nikkei Stock Average rose 0.5% to close at 26571.87

Europe

European markets were down on Tuesday. The pan-European STOXX Europe 600 Index ended down 0.13%, the German DAX is down 0.72% while the French CAC was down 0.27%.

In London, the FTSE 100 on Tuesday closed down 0.5% amid fears that the inflationary impact of U.K. economic policy could push the Bank of England into an emergency rate hike, said Joshua Mahony, IG's senior market analyst.

"With Liz Truss and Kwasi Kwarteng under pressure less than a month into their appointment, traders will hope that this provides a stark warning over the need to be fiscally responsible despite the desire spend their way out of this crisis," Mr. Mahony added.

The index's top fallers were Rightmove PLC, down 8.9%, SSE PLC, which fell 7.3%, and Taylor Wimpey PLC, down 7.2%.

North America

US stocks finished mixed Tuesday after swinging between gains and losses as investors parsed a spate of economic data and comments from Federal Reserve officials.

All three indexes spent much of the morning in the green, then slipped by midday. The Dow Jones Industrial Average, which entered a bear market on Monday, fell 0.4% Tuesday as of 4 p.m. ET. The broad S&P 500 slipped 0.2%, closing at its lowest level of the year for the second day in a row. The technology-heavy Nasdaq Composite was up 0.25%.

Tuesday's declines prolong a brutal year for financial markets. Stocks and bonds have both dropped sharply this year, an unusual tandem that reflects just how unnerved many investors feel. The Dow, the S&P and the Nasdaq are all on pace for their worst first nine months of a year since 2002. All three fell for the five straight trading days that ended Monday.

Stubbornly high inflation has roiled markets since the start of the year. The Federal Reserve in response has been raising interest rates to try to cool the economy, raising fears that the central bank will tip the U.S. into recession. Some investors hoped this summer that the rate increases might be coming to an end, and stocks rebounded briefly. Now, investors are coming to grips with the idea that bigger interest-rate increases -- and weaker global economic growth -- are here to stay for quite a while.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, reaffirmed the central bank's resolve to bring down persistent and elevated inflation in a Tuesday interview with The Wall Street Journal. "There's a lot of tightening in the pipeline," Mr. Kashkari said, adding that the Fed is "committed to restoring price stability" but also recognizes " there is a risk of overdoing it."

A sharp rise in interest rates has been weighing on stocks, said Mimi Duff, managing director at GenTrust, a registered investment adviser with about $3 billion in assets. "I think we need to start seeing the rates stabilize before we can bottom out in equities," she added.
Faced with the uncertain macroeconomic backdrop, traders and investors were unwilling to call a bottom.

"The equity market is paying attention to this perpetual ratcheting higher of terminal rates in the US”, said Charles Diebel, head of fixed income at Mediolanum International Funds. "The more the terminal rate goes up -- while necessary to deal with the inflation threat -- the bigger the economic downturn will be."

"When financial conditions are like this, historically, something always breaks," he said.
On the economic front, data Tuesday showed that companies reduced durable goods orders for a second straight month. Home prices continued to notch big year-over-year gains, but the pace of that growth slowed. Home prices fell month over month.