Australia

Australian shares are set to open higher today following a positive end to the week for major US indices. Bank stocks led Friday’s gains after reporting strong Q4 earnings.

ASX futures were 0.53% or 39 points higher as of 8:00am on Saturday, suggesting a gain at the open.

Stocks gained Friday to cap off a winning week as investors weighed a batch of quarterly earnings results from big banks shedding light on how US companies are holding up in a slowing economy.

The three major stock indices opened lower but climbed into positive territory through the trading session. The S&P 500 gained 0.4%, the Nasdaq Composite was up 0.7%, and the Dow Jones Industrial Average added 0.3%. All three benchmarks finished the week with gains of 2% or more.

Some of the country's biggest banks kicked off the fourth-quarter earnings season with better-than-expected results. Fourth-quarter reports from JPMorgan Chase and Bank of America showed many lenders have so far benefited from the Federal Reserve's interest rate increases, which allow them to earn more from loans. Both stocks rose more than 2%.

In commodity markets, Brent crude oil gained 1.58% to $US85.36 a barrel while gold added 1.28%% to US$1,921.34.

In local bond markets, the yield on Australian 2 Year government bonds remained at 3.15% while the 10 Year dipped to 3.59%. Overseas, the yield on 2 Year US Treasury notes increased slightly to 4.23% while the yield on 10 Year US Treasury notes was unchanged at 3.50%.

The Australian dollar edged up to 69.78 US cents from its previous close of 69.67. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, decreased to 95.06.

Asia

Chinese shares rose Friday to finish the week higher as optimism about the country's reopening progress buoyed the market. Analysts at Bohai Securities said that major indices might beat a small retreat before the upcoming Lunar New Year holiday but will likely continue to record gains in Q1. Pharmaceutical companies and consumption related stocks led Friday's gains. Shenzhen Mindray Bio-Medical Electronics rose 2.8% and index heavyweight Kweichow Moutai increased 2.9%. Among the laggards were chip makers and software companies. TCL Zhonghuan Renewable Energy Technology was 0.9% lower and Beijing Kingsoft Office Software dropped 0.9%. The Shanghai Composite Index increased 1.0% to 3195.31, the Shenzhen Composite Index added 0.9% and the ChiNext Price Index was 1.4% higher.

Hong Kong stocks ended the session higher, extending its start-of-2023 rally amid continued optimism about China's reopening. The benchmark Hang Seng Index rose 1.0% to settle at 21738.66. Biotech company Wuxi Biologics jumped 6.4% to become the top gainer on the index. The surge came after the company told analysts that it secured more new integrated projects in 2022 than it had originally targeted. Additional gains were spread out across sectors, with jewelry retailer Chow Tai Fook up by 4.8% and internet company NetEase rising 4.7%.

Japanese stocks ended lower, dragged by Fast Retailing's decline as well as drops in electronics and food shares. The yen's strength clouded the earnings outlook. Fast Retailing slumped 8.0% after its first-quarter net profit dropped 9.1% on year. The Nikkei Stock Average fell 1.2% to 26119.52.

Europe

European stocks rose as investors cheered better-than-forecast UK and German economic growth data. The pan-European Stoxx Europe 600 gained 0.54%, the German DAX climbed 0.19%, and the French CAC 40 added 0.69%.

The British FTSE 100 closed 0.64% higher, helped by positive UK and German gross domestic product numbers which "added to the cheerier atmosphere," IG analyst Chris Beauchamp said in a note. "So far the Christmas trading statements have been broadly encouraging, and with recession fears capped for the time being the index's blend of global companies seems to offer a promising mix for investors looking for a home where tech stocks do not feature too highly," Beauchamp said.

Rolls Royce Holdings, up 4.6%, was the session's biggest riser, followed by Haleon and Airtel Africa, both up 3.6%. Fresnillo led the day's fallers, down 2%, followed by Aviva and British American Tobacco, down 1.7% and 1.5% respectively.

Official data pointing to a stagnation of the German economy in Q4 has greatly diminished recession risks for this winter as the outlook for Q1 2023 has also improved, Deutsche Bank's chief economist Stefan Schneider and senior economist Marc Schattenberg said in a note. Hefty gas-storage levels, a substantial decline in wholesale gas prices, and increasing optimism after China's swift change in coronavirus policy should contribute to avoid a recession in Germany, they said.

"Although we still expect structurally higher energy prices, the US recession in 2H, and the increasing impact of the ECB's policy shift to weigh on the economic momentum throughout this year, we now expect annual GDP growth to stagnate in 2023," Deutsche Bank said.

North America

Stocks gained Friday to cap off a winning week as investors weighed a batch of quarterly earnings results from big banks shedding light on how US companies are holding up in a slowing economy.

The three major stock indices opened lower but climbed into positive territory through the trading session. The S&P 500 gained 0.4%, the Nasdaq Composite was up 0.7%, and the Dow Jones Industrial Average added 0.3%. All three benchmarks finished the week with gains of 2% or more.

Some of the country's biggest banks kicked off the fourth-quarter earnings season with better-than-expected results. Fourth-quarter reports from JPMorgan Chase and Bank of America showed many lenders have so far benefited from the Federal Reserve's interest rate increases, which allow them to earn more from loans. Both stocks rose more than 2%.

"It's been a strong start to the year for bank stocks, supported by a combination of higher interest rates and the economic contraction being not as severe as expected," said Kiran Ganesh, a multi-asset strategist at UBS. "That's the Goldilocks scenario for banks."

An optimistic reading on the state of American consumers also boosted market sentiment, with the University of Michigan's consumer sentiment index popping to its highest level since April. Expectations for inflation one year from now also edged down, according to the survey released Friday.

Investors are growing increasingly convinced the Fed will cut interest rates this year, with stocks rallying to kick off 2023. The S&P 500 is up more than 4% so far this year.

Recent gains in some of the market's more speculative corners signal the enthusiasm from investors. The ARK Innovation exchange-traded fund, which sank in 2022, is up 15% year to date. Bed Bath & Beyond shares have rallied more than 45%, despite a sharp decline Friday, evoking the wild meme-stock trading of 2021.

"The equity market is trying to grasp onto signs the Fed might decelerate and end their policy of outsized rate hikes," said Ross Mayfield, investment strategy analyst at Baird.

Still, Friday's bank earnings reports highlighted recession concerns, as lenders also set aside more money to cover potential losses on loans.

Elsewhere on Friday, Delta Air Lines shares fell 3.5% even after the airline reported better-than-expected earnings for the fourth quarter, as travel demand continues to recover from the pandemic hit.

Tesla shares slipped 0.9% after the electric-vehicle maker cut prices. Shares of other car makers also fell, with General Motors and Ford down 4.75% and 5.3%, respectively.