Australia

Australian shares are set to edge lower following a dip on Wall Street after Bank of England Gov. Andrew Bailey's remark that the U.K. central bank's plan to rescue pension funds hit by interest-rate increases will end as scheduled Friday.

ASX futures were down 20 points or 0.3% at 6623 as of 8:00am on Wednesday, pointing to a slip at the open.

Major US stock indexes were mixed following the remarks, made at the Institute for International Finance's annual meeting in Washington D.C., reversing a rally of about 0.8% in the S&P 500. The Dow was modestly higher and the Nasdaq Composite was down 1.3%, putting it on track for a return to a "bear market," or a decline of 20% or more from a recent peak.

The comments were taken as negative on Wall Street because they raise the prospect of further asset sales by U.K. pension funds in the face of large interest-rate increases.
The program of bond buys launched Sept. 28 had been intended to give the funds a "window of opportunity" to sell assets in an orderly fashion, but Mr. Bailey said that opportunity would end on Oct. 14.

Stocks had opened lower, then turned higher at midday. They reversed course in the final hour of trading after Mr. Bailey's comments. "You've got three days left," Mr. Bailey said in remarks addressed to pension funds. "You've got to get this done."

In commodity markets, Brent crude oil slipped 2.67% to $US93.62 a barrel, gold edged down 0.1% to US$1,666.44.

In local bond markets, the yield on Australian 2 Year government bonds rose to 3.37% while the 10 Year edged up to 4.03%. Overseas, the yield on 2 Year US Treasury notes rose to 4.30% and the yield on the 10 Year US Treasury notes was up to 3.92%.

The Australian dollar hit 62.82 US cents down from the previous close of 62.98. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 104.8.

Asia

Chinese shares ended higher, with the Shanghai Composite Index rising 0.2% to 2979.79, after hitting a five-month low Monday. Renewable energy, miners and auto sectors strengthened, while semiconductor shares declined. Battery maker CATL gained 6.0% after forecasting its 3Q net profit could triple from a year earlier. Tianqi Lithium added 3.7% and BYD Co. was up 1.5%. Semiconductor stocks retreated across the region after the US curbed chip exports to China. Naura Technology declined 10% for a second straight day despite the company guiding for 3Q net profit to more than double from a year earlier; Advanced Micro-Fabrication Equipment also lost 6.6%. The Shenzhen Composite Index climbed 0.6% and the ChiNext Price Index was 1.1% higher.

Hong Kong stocks ended the session sharply lower, as the benchmark Hang Seng Index slumped to a 13-year low. The index fell 2.2% to 16832.36, its worst closing since early 2009. Chinese property developers led the losses, as investor worries increasingly grew over the sector's liquidity crisis. Country Garden skidded 9.0%, Longfor was down by 8.5% and Vanke shed 5.5%. China's internet giants further weighed on the market, with Meituan losing 6.1% and Baidu dropping 5.8%. The decline came after expectations rose for another aggressive interest-rate increase by the Fed, which tend to hurt growth stocks like internet names particularly hard.

Japanese stocks end lower, dragged by falls in electronics and machinery stocks, as concerns continue about policy tightening by major central banks and US-China trade frictions. Nidec Corp. drops 9.3% and SMC Corp. falls 6.7%. Meanwhile, airline and railway stocks end higher amid hopes for Japan's border reopening for more travelers. The Nikkei Stock Average falls 2.6% to 26401.25. USD/JPY is at 145.77, compared with 145.72 as of Monday 5 p.m. Eastern Time. The war in Ukraine is being closely watched. There were no trades done for the 10-year Japanese government bonds.

Europe

European stocks fell amid ongoing concerns about the global economy and the UK gilt market. The pan-European Stoxx Europe 600 retreated 0.6%, the German DAX fell 0.4%, the French CAC 40 backtracked 0.2%.

In London, the FTSE 100 closed down 1.1% at 6,885 points after the Bank of England once again interjected in the gilts market, Joshua Mahony, IG's senior market analyst, said.
The extension and expansion of last week's BoE "temporary" intervention signals the fact that the problems facing the pensions market are far from simple to fix, Mahony said. "While the bank is expected to end their support on Friday, comments from the Pensions and Lifetime Savings Association highlight a feeling that the BoE may need to push their policy through into November if they are to adequately prop up an industry that continues to struggle under the weight of a highly volatile gilts market," Mahony added.

The index's top fallers were Ocado Group PLC, Legal & General Group PLC, and Harbour Energy PLC, closing down 5.3%, 5.2% and 4.9%, respectively.

North America

US stocks and the British pound tumbled Tuesday afternoon following Bank of England Gov. Andrew Bailey's remark that the U.K. central bank's plan to rescue pension funds hit by interest-rate increases will end as scheduled Friday.

Major US stock indexes were mixed following the remarks, made at the Institute for International Finance's annual meeting in Washington D.C., reversing a rally of about 0.8% in the S&P 500. The Dow was modestly higher and the Nasdaq Composite was down 1.3%, putting it on track for a return to a "bear market," or a decline of 20% or more from a recent peak.

The comments were taken as negative on Wall Street because they raise the prospect of further asset sales by U.K. pension funds in the face of large interest-rate increases.
The program of bond buys launched Sept. 28 had been intended to give the funds a "window of opportunity" to sell assets in an orderly fashion, but Mr. Bailey said that opportunity would end on Oct. 14.

Stocks had opened lower, then turned higher at midday. They reversed course in the final hour of trading after Mr. Bailey's comments. "You've got three days left," Mr. Bailey said in remarks addressed to pension funds. "You've got to get this done."

The Dow's performance was aided by big gains in Amgen Inc. The biotech stock jumped 6%, making it the best performer in the Dow on Tuesday. Shares of biotech companies helped power the other indexes higher, too, with the Nasdaq Biotechnology Index rising more than 2% in recent trading.

Investors have been grappling throughout the year with the effects of decades-high inflation and the Federal Reserve's attempts to tame it with higher interest rates. For many, the concerns have grown deeper in recent weeks as inflation remains stubbornly high and traders worry that the Fed will cool the economy so much that it tips into a recession.

"The question now is not if there will be a recession, it's when and how bad," said Justin Wiggs, managing director in equity trading at Stifel Nicolaus. One week ago, traders were cheering the biggest two-day rally in the Dow and S&P 500 in two years, but stocks have fallen steadily since then. Both the Dow and the S&P 500 remain in bear markets.

US inflation data due Thursday will show whether the Fed's sizable interest-rate rises are working to tame soaring consumer prices. A larger-than-forecast rise could bolster expectations that Fed officials will opt for another supersize 0.75 percentage point increase at their next meeting.

Meanwhile, investors are bracing for the first wave of major corporate earnings reports due this week, which are expected to show companies struggling with high rates and weakening consumer demand. PepsiCo reports Wednesday while financial titans such as BlackRock, JPMorgan Chase and Morgan Stanley report later in the week.

"First-quarter and second-quarter earnings came in remarkably well. The third quarter may be the pivot point at which we see earnings cannot keep growing to the sky, and that companies are subject to the economic headwinds we are facing from all kinds of directions," said David Donabedian, chief investment officer at CIBC Private Wealth US.
And what's even more important than third-quarter results, some investors say, is the guidance corporate leaders give about next year.

Some traders said Tuesday's midday bounce higher was not so much a sign of strength, but rather a sign of so-called short covering. Some traders make money by betting that stocks are headed lower. To do so, they borrow shares and sell them, hoping to profit by buying these shares back at a lower price at a later date. When stocks start to climb, those gains can be accelerated by short sellers covering their bets by buying shares.