Australia

Australian shares are set to edge higher following a dip on Wall Street as investors worried about further interest rate hikes from the US Fed.

ASX futures were up 15 points or 0.21% at 6680 as of 7:00am on Wednesday, pointing to a gain at the open.

US stocks edged lower Tuesday in quiet trading as investors weighed uncertainty over the path of interest-rate increases.

The S&P 500 lost 0.2%, while the Dow Jones Industrial Average fell 0.5% or a little over 150 points. The tech-heavy Nasdaq Composite finished little changed.

The stock market has rallied from its June low as corporate earnings reports came in better than expected and signs of easing inflation inspired hopes that the Federal Reserve would slow the pace of rate increases.

But major indexes faltered in recent days as hawkish comments from central bank officials returned investors' focus to the possibility that aggressive rate increases will continue.

Stocks started the week on a downbeat note, with the Dow industrials falling 643 points Monday and the S&P 500 and Nasdaq losing more than 2% each.

"The euphoria has really fizzled out for equities," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown in London. "The clamour of voices has become louder from central bank policymakers saying, 'Hold on, we aren't out of the woods yet.'"

In commodity markets, Brent crude oil gained 3.98% to US$100.32 a barrel, gold edged down 0.01% to US$1,747.98.

In local bond markets, the yield on Australian 2 Year government bonds gained to 3.01% while the 10 Year fell to 3.57%. Overseas, the yield on 2 Year US Treasury notes gained to 3.30% and the yield on the 10 Year US Treasury notes was up at 3.05%.

The Australian dollar hit 69.27 US cents up from the previous close of 68.75. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 99.65.

Asia

Chinese shares ended in muted trading, amid worries over the ongoing drought and heatwave in the country which has led to forced power rationing. Local governments in central China are currently limiting factory production and opening hours for malls amid the country's worst heat wave in six decades. The benchmark Shanghai Composite Index was flat at 3276.22, the Shenzhen Composite was little changed at 2227.38 and the ChiNext Price Index was flat at 2780.31. Stocks of utility companies rose, with Shanghai Electric Power up 1.5% and Zhejiang Zheneng Electric Power 0.8% higher. Among liquor stocks, Kweichow Moutai fell 1.3% and Wuliangye Yibin dropped 2.0%.

Hong Kong's Hang Seng Index lost 0.8% to 19503.25, hitting the lowest closing level in three months. Regional markets weakened as investors remained concerned about further monetary tightening by the Fed. Chinese automakers weighed on the market, as power curbs amid a heatwave in the country led to concerns about production disruptions. Geely slid 6.3% and Great Wall Motor shed 4.3%. Sportswear makers' shares reacted to the latest results, with Anta Sports up 4.0% while Xtep lost 6.5%. Tech shares broadly weakened, with Meituan down 1.4%, but JD.com gained 1.2% ahead of its earnings.

Japanese stocks ended lower, dragged by falls in electronics and auto stocks, as concerns persist over the Fed's further tightening and its impact on the global economic outlook. Sony Group fell 3.3% and Denso Corp. lost 3.0%. The Nikkei Stock Average closed 1.2% lower at 28452.75. USD/JPY is at 137.34, compared with 137.51 as of Monday 5 p.m. Eastern Time. Investors are focusing on economic data, including U.S. new home sales due later in the day. The 10-year Japanese government bond yield fell half a basis point to 0.215%.

Europe

European stocks closed lower as traders reacted to weak economic data and bet on the U.S. Federal Reserve reaffirming its commitment to fighting inflation at the Jackson Hole symposium Friday. The pan-European Stoxx Europe 600 declined 0.4%, the FTSE 100 dropped 0.6%, the German DAX slipped 0.3% and the French CAC 40 shed 0.3%.

"It's clear that investors already have an eye on the Jackson Hole symposium later in the week and we're perhaps seeing some apprehension and anxiety ahead of that," Oanda analyst Craig Erlam writes, “Outside the US there doesn't seem much to be optimistic about as August's eurozone purchasing managers' index data was "pretty poor."

The London FTSE 100 Index closed Tuesday down 0.6% dragged by the industrial and business-service sector, which offset oil and mining gains on a rebound in crude oil prices. BT rose 2.5% after the telecom said the UK government had decided against taking any further action over shareholder Altice Europe's increase in its stake in BT to 18% from 12.1%.

Shell and BP rose more than 1% and miners also gained as Brent crude advanced 1.1% to $97.58 a barrel and precious metal and copper prices increased. Still, the biggest losers included safety-product maker Halma, steam-system manufacturer Spirax-Sarco Engineering, industrial conglomerate Smiths Group, chemical company Croda International, testing-and-inspection group Intertek and support-service suppliers Bunzl and Rentokil Initial.

North America

US stocks edged lower Tuesday in quiet trading as investors weighed uncertainty over the path of interest-rate increases. The S&P 500 lost 0.2%, while the Dow Jones Industrial Average fell 0.5%, or a little over 150 points. The tech-heavy Nasdaq Composite finished little changed.

The stock market has rallied from its June low as corporate earnings reports came in better than expected and signs of easing inflation inspired hopes that the Federal Reserve would slow the pace of rate increases. But major indexes faltered in recent days as hawkish comments from central bank officials returned investors' focus to the possibility that aggressive rate increases will continue.

"The euphoria has really fizzled out for equities," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown in London. "The clamour of voices has become louder from central bank policymakers saying, 'Hold on, we aren't out of the woods yet.'"

All eyes will be on a speech Friday by Fed Chairman Jerome Powell in Jackson Hole, Wyo. Mr. Powell is expected to provide clues on the Fed's plans for combating inflation that remains well above the central bank's target.

"The idea is to see what kind of voices are prevailing in terms of Powell's outlook going forward," said Arun Bharath, chief investment officer at Bel Air Investment Advisors. "Is it going to be more hawkish or is it going to lean toward less hawkishness?"

Data earlier this month showed that annual U.S. inflation fell slightly from a four-decade high. The consumer-price index rose 8.5% in July from a year earlier, down from 9.1% in June. "Inflation is still a real challenge, and the Fed has to be extremely vigilant and keep monetary policy tight," Ms. Streeter said.

Investors are watching the tail end of a corporate earnings season that has suggested businesses are managing high inflation and rising borrowing costs. With results in from more than 95% of S&P 500 companies, analysts expect that profits rose 6.2% in the second quarter compared with a year earlier, according to FactSet.

Retailers Macy's and Dick's Sporting Goods both topped Wall Street expectations for the second quarter, sending their shares up 3.7% and 0.7%, respectively. Shares of Palo Alto Networks climbed 12% after the network security technology company reported better-than-expected revenue and showed a profit.

Money managers also are considering how signs of a slowdown in economic growth should play into their expectations for corporate earnings and for the path of the Fed's interest-rate increases. The composite purchasing managers index for the US economy, which measures manufacturing and services activity, fell to 45.0 in August, the second consecutive month of decline and the lowest reading since May 2020. Readings below 50 indicate a contraction. Stephanie Lang, chief investment officer at Homrich Berg, said her firm in recent weeks has trimmed its position in U.S. stocks.

"We believe that recession risk is high based on economic data and the belief that the Fed will continue its interest-rate hikes moving forward, " she said. Among individual stocks, Twitter shares fell 7.3% after the company's former head of security filed a whistleblower complaint accusing it of failing to protect sensitive user data.