Australia

Australian shares are set to edge lower after Wall Street extended losses to a third straight session, as investors fear that the US Federal Reserve will continue to aggressively raise rates.

ASX futures were down 58 points or 0.8% at 6860 as of 7:00am on Wednesday, pointing to a slip at the open.

US stocks extended their losses to a third straight session as economic data fanned investors' fears that the Federal Reserve has ample runway to continue raising interest rates aggressively. Each of the major indexes declined Tuesday, continuing a sharp selloff in the wake of a reset in monetary-policy expectations. The S&P 500 shed 44.45 points, or 1.1%, to close at 3986.16. The benchmark has seen more than $1.5 trillion of its market capitalization wiped out since stocks began selling off Friday.

The tech-focused Nasdaq Composite pulled back 134.53 points, or 1.1%, to 11883.14. The Dow Jones Industrial Average retreated 308.12 points, or 1%, to 31790.87. Stocks began their descent after Federal Reserve Chairman Jerome Powell said Friday that the central bank must continue raising interest rates and hold them at a higher level until policy makers are confident inflation is under control. This ran contrary to some investors' expectations that the Fed would slow the pace of rate increases due to easing inflation figures.

"Ever since Chairman Powell's speech, the market has refocused on the macro environment and monetary policy. With the Fed being aggressive again, that cloud of uncertainty is weighing on the markets," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

In commodity markets, Brent crude oil slipped 4.93% to $US99.91 a barrel, gold edged down 0.73% to US$1,724.37.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 2.97% while the 10 Year fell to 3.6%. Overseas, the yield on 2 Year US Treasury notes ticked up to3.46% and the yield on the 10 Year US Treasury notes inched down to 3.10%.

The Australian dollar hit 68.53 US cents down from the previous close of 69.02. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 100.27.

Asia

Chinese stocks finished lower amid prevailing concerns about the country's economic recovery and companies' earnings outlook. The A-share market still faces uncertainties stemming from U.S.-China relations and the property sector downturn, Shanxi Securities says in a note. Coal miners were among top laggards, reversing a recent uptrend. China Shenhua Energy lost 4.3% and Yankuang Energy slid 5.8%. Renewable-energy sectors also weakened, with LONGi Green down 1.1% and electric-car battery maker CATL 2.1% lower. Among gainers were telecom equipment maker ZTE, which was up 1.7%. The Shanghai Composite Index fell 0.4% to 3227.22, the Shenzhen Composite Index declined 0.5% and the ChiNext Price Index was 0.7% lower.

Hong Kong's Hang Seng Index fell 0.4% to 19949.03, extending Monday's losses amid investor concerns about higher interest rates and the economic outlook. Consumer sectors and pharma companies weakened, while local real-estate stocks climbed. China Resources Beer, Anta Sports and Wuxi Biologics lost 1.3%-1.8%, while Wharf REIC added 0.8%. Among the top blue-chip laggards were companies that just released results. Country Garden Holdings fell 4.2% after its first-half net profit slumped 96%, while car dealer Zhongsheng Group lost 7.0% after its 1H net profit declined. Citic Ltd. gained 1.1% following stronger 1H profit.

The Nikkei Stock Average ended 1.1% higher at 28195.58, recovering from a selloff on Monday sparked by the U.S Fed chair's hawkish comments. Stocks of real-estate developers rose, with Nomura Real Estate Holdings gaining 1.8%, Tokyu Fudosan adding 1.6% and Hulic Co. 1.2% higher. Among auto stocks, Honda Motor rose 0.8% and Nissan Motor advanced 2.1%. Toyota Motor gained 0.7% despite reporting that its July global vehicle production fell 8.6% on year. Electronics company Ricoh gained 2.4% after saying it is establishing a biomedical startup fund in September. USD/JPY was at 138.51 compared with 138.72 late Monday in New York. The yield on the 10-year JGB was down two basis points at 0.220%.

Europe

European markets mostly dropped after a downbeat start to trading on Wall Street as interest-rate concerns linger. The pan-European Stoxx Europe 600 fell 0.7%, and the French CAC 40 shed 0.3%, though the German DAX advanced 0.5%.

"An upbeat European morning has soon turned swiftly around Tuesday, with the afternoon seeing sharp declines on both sides of the Atlantic," IG analyst Joshua Mahony wrote. "Unfortunately, markets will be at risk for some time yet, with inflationary pressures ensuring rates remain higher for longer."

In London, after the long weekend, FTSE 100 fell 0.9% on Monday, as energy and mining stocks booked significant losses. British Gas owner Centrica plunged 6.6%, with utility group SSE falling 5.1%. Oil major BP was down too. As for miners, Anglo American declined 4.7%, Rio Tinto dropped 3.3% and Glencore closed 3.0% lower. In addition, distribution group Bunzl dived 6.1% after its financial guidance disappointed investors.

"Although it raised its operating-margin outlook, it's still expected to fall in the full year versus 2021," Interactive Investor's Victoria Scholar noted.

North America 

US stocks extended their losses to a third straight session as economic data fanned investors' fears that the Federal Reserve has ample runway to continue raising interest rates aggressively.

Each of the major indexes declined Tuesday, continuing a sharp selloff in the wake of a reset in monetary-policy expectations. The S&P 500 shed 44.45 points, or 1.1%, to close at 3986.16. The benchmark has seen more than $1.5 trillion of its market capitalization wiped out since stocks began selling off Friday.

The tech-focused Nasdaq Composite pulled back 134.53 points, or 1.1%, to 11883.14. The Dow Jones Industrial Average retreated 308.12 points, or 1%, to 31790.87. The stock market's summer rally has screeched to a halt. With one trading session left in August, all three indexes are on track to notch at least 3% declines for the month. At its highest close of this month, the S&P 500 was up 17% from its mid-June low. Now it sits 8.7% off that low point.

On Tuesday, the market adopted a somewhat counterintuitive "bad news is good news" dynamic. Fresh data showing a tight U.S. labor market spelled trouble for stocks, with investors believing upbeat economic readings could embolden the Fed to continue with big interest-rate increases. Job openings rose in July to a seasonally adjusted 11.2 million, up from the month prior, the Labor Department reported Tuesday morning.

Investors await the monthly payrolls report due Friday morning for another assessment on the strength of the labor picture and its potential impact on the trajectory of monetary policy. Economists surveyed by The Wall Street Journal expect to see 318,000 jobs added in August, down slightly from July's 528,000 payrolls increase.

The pullback in stocks on Tuesday was broad, with all 11 sectors of the S&P 500 finishing in negative territory. All but two components in the blue-chip Dow industrials closed lower.

On the corporate-earnings front, Best Buy and Big Lots shares rose 1.6% and 12%, respectively, after the retailers reported quarterly results that beat analysts' expectations. Still, the companies warned of a pullback in spending as consumers contend with hot inflation.

With the second-quarter earnings reporting season drawing to a close, economic reports could hold greater significance for investors without corporate dispatches to mull over, according to Joe Zappia, principal and co-chief investment officer at LVW Advisors.

"More important than the actual economic releases over the next few weeks is how the markets react to them. That will give a clue about sentiment and positioning," he said.
In other US economic data released Tuesday, American attitudes toward jobs and the economy brightened in August from the month before, the Conference Board's consumer-confidence index showed.

Meanwhile, home-price growth slowed in June as higher mortgage rates made homeownership less affordable, according to the latest figures from the S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation.