Australia

Australian shares are expected to decline this morning following losses in the US. The Nasdaq Composite, which mainly contains technology shares, dropped Friday on concerns of further interest rate tightening. After the producer-price index (PPI) revealed an increase in US supplier prices, investors worried about the Federal Reserve’s next move.

ASX futures had fallen 27 points or 0.4% as of 7:00am on Saturday, suggesting a lower open.

The summer stock market rally has started to cool after the S&P 500 fell modestly for a second consecutive week.

The tech-heavy Nasdaq Composite was Friday's worst major index performer, falling 0.7% to a one-month low. The S&P 500 slid 0.1% and the Dow Jones Industrial Average added 0.3%. The S&P/TSX, Canada’s benchmark stock index, also gained 0.3%.

Inflation has been back in focus, with data points sending investors conflicting signals.
On Friday, the producer-price index (PPI) showed supplier prices ticking up from June's flat reading, prompting some concern after a largely encouraging July CPI report the day before.

In commodity markets, Brent crude oil added 0.3% to US$86.64 a barrel while gold remained near US$1,913.05.

Australian government bonds were higher, with the 2 Year yield rising to 3.87% and the 10 Year yield advancing to 4.11%. US Treasury notes were also higher, with the 2 Year yield edging up to 4.89% and the 10 Year yield increasing to 4.16%.

The Australian dollar declined to 64.92 US cents from its previous close of 65.14. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, rose to 97.67.

Asia

Chinese shares closed lower amid persistent concerns over China's economic recovery and property-sector woes. Investors were concerned after developer Country Garden failed to make bond interest payments earlier this week, which could trigger default. Almost all sectors retreated on Friday, with the financial sector leading losses. Citic Securities dropped 4.3% and China International Capital Corp. declined 5.9%. Energy stocks fell after yesterday's gains. PetroChina lost 1.6% and Sinopec declined 1.9%. The benchmark Shanghai Composite Index dropped 2.0% to 3189.25 and finished the week 3.0% lower. The Shenzhen Composite Index declined 1.9% and the tech-heavy ChiNext Price Index lost 2.3%.

Hong Kong stocks closed lower, marking a second week of losses amid concerns over China's economic recovery and the Federal Reserve's next moves. Hawkish-leaning comments from Fed officials and a rise in Treasury yields overnight weighed on market sentiment, Saxo Markets' APAC strategy team said in commentary. Health-services and technology stocks led losses. Alibaba Health Information Technology shed 5.5% and JD Health declined 3.3%. Alibaba Group, which rose 1.0%, partly offset a broader tech decline after posting stellar 1Q results. The Hang Seng Tech Index fell 2.4%. Country Garden Holdings dropped 5.8% to HK$0.98, and touched a record intraday low of HK$0.89 after guiding for a 1H loss. The benchmark Hang Seng Index ended 0.9% lower at 19075.19.

The Japanese stock market was closed Friday in celebration of Mountain Day.

Indian shares ended lower, weighed by financial stocks, after the Reserve Bank of India asked banks to maintain a 10% incremental cash reserve ratio. IndusInd Bank dropped 2.3% and Bajaj Finance declined 1.3%. Other losers included JSW Steel, which fell 1.3%, and Hindustan Unilever, which dropped 1.4%. Among gainers, HCL Technologies rose 3.2% and Power Grid Corp. of India gained 0.95%. The benchmark Sensex index fell 0.6% to 65322.65.

Europe

European stocks dropped after downbeat trading in Asia. The pan-European Stoxx Europe 600 lost 1.1%, the French CAC 40 gave up 1.3%, and the German DAX retreated 1.0%. Property and tech shares were among Europe’s biggest fallers.

The UK economy expanded by a better-than-expected 0.2% in 2Q, according to official data, though economists voiced caution. "The UK economy remains in a precarious place," British Chambers of Commerce Head of Research David Bharier wrote. "Businesses continue to face a worrying mix of high inflation, rising interest rates, a tight labor market and global economic uncertainty."

In response to the data, London’s FTSE 100 index ended Friday with a 1.2% loss. Markets across Europe moved lower following signs that price pressures in the US are beginning to revive, IG Group Chief Market Analyst Chris Beauchamp said in a market comment. "Stocks have been highly sensitive to bad news throughout August, and a combination of rising US inflation and weak Chinese data in recent sessions has been enough to tip the FTSE 100 to the downside once again," said Beauchamp.

North America

The summer stock market rally has started to cool after the S&P 500 fell modestly for a second consecutive week.

The tech-heavy Nasdaq Composite was Friday's worst major index performer, falling 0.7% to a one-month low. The S&P 500 slid 0.1% and the Dow Jones Industrial Average added 0.3%. The S&P/TSX, Canada’s benchmark stock index, also gained 0.3%.

Inflation has been back in focus, with data points sending investors conflicting signals.
On Friday, the producer-price index (PPI) showed supplier prices ticking up from June's flat reading, prompting some concern after a largely encouraging July CPI report the day before.

Treasury yields rose Friday, with the yield on the benchmark 10 Year bond hitting 4.166%, from 4.081%.

Later in the morning, the University of Michigan's August gauge of consumer sentiment inched down from a nearly two-year high, but showed Americans expect slightly lower inflation next year. Economists watch inflation expectations closely, believing that high consumer expectations for prices can feed additional inflation.

For markets that have priced in a soft-landing scenario where the Federal Reserve curbs inflation without starting a recession, every inflation data point is critical.

"The increase in wholesale prices serves as a reminder that the data-dependent Fed isn't ready to declare victory on its campaign to quell inflation," said Quincy Krosby, chief global strategist at LPL Financial.

The Nasdaq, which has a high weighting of growth-oriented companies that are more sensitive to interest rates, fell for two straight weeks for the first time this year. The largest technology firms have soared higher this year, prompting concern over what Wall Street sees as expensive valuations.

Nvidia, the S&P 500's top performer this year, fell 3.6% Friday, for its fourth consecutive daily loss.

"After a dominant start to the year, technology has lost momentum," Rob Anderson, an analyst at Ned Davis Research, wrote in a research note Friday. "Mega-cap weakness and valuations have the sector on a short leash."

Elsewhere Friday, UBS's US shares gained 5.6%, after the Swiss lender said it no longer needed a $10 billion government backstop for its emergency takeover of Credit Suisse.

News Corp was the S&P 500's best performer, adding 4.6%. The media company reported record profit at its Dow Jones unit, which publishes The Wall Street Journal, but booked a loss overall.

Volatile trading in WeWork shares continued. The co-working space operator, which on Tuesday raised doubt about its ability to stay in business, has staged a 54% rally over the last two days. Its shares closed Friday little changed from where they were before WeWork issued the "going concern" warning. WeWork shares remain down more than 98% from when they began trading.