Australia

Australian shares were heading downward Wednesday morning following an uneasy session in global markets. As the US government approaches its borrowing limit, investors worried about the potential impacts of a federal default. Chinese shares also dragged after data suggested the country’s economic recovery has slowed.

ASX futures were 41 points or 0.6% lower as of 6:00am Wednesday, suggesting losses at the open.

US indices retreated Tuesday with debt-ceiling negotiations remaining at a standstill, though growth stocks made some gains.

The S&P 500 slipped 0.6%, the Nasdaq Composite gained 0.2% and the Dow Jones Industrial Average dropped 1.0%, weighed down by Home Depot shares. The S&P 500's consumer discretionary, communication services and tech sectors rose.

Retail sales data released before the open showed Americans increased their spending modestly in April as inflationary pressures eased. Home Depot cut its forecasts for the year, sending its stock down 2.1%.

In commodity markets, Brent crude oil lost 0.6% to US$74.77 a barrel while gold dropped 1.3% to US$1,991.01.

Australian government bonds were broadly unchanged, with the 2 Year yield remaining at 3.25% and the 10 Year yield hinting down to 3.41%. US Treasury notes were mixed, with the 2 Year yield decreasing to 4.07% and the 10 Year yield climbing to 3.54%.

The Australian dollar moved down to 66.56 US cents from its previous close of 67.00. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, increased to 96.55.

Asia

Chinese shares closed lower after disappointing data that revealed the country’s economic recovery was losing steam. Industrial production, retail sales and property investment data came in below market expectations. The Shanghai Composite Index ended 0.6% lower at 3290.99, the Shenzhen Composite Index fell 0.7% and the ChiNext Price Index declined 0.3%. The media sector led losses as stocks retreated from the chatbot-related buying spree. Mango Excellent Media declined 3.5% and Wanda Film Holding dropped 3.7%. Consumption companies also retreated with China Tourism Group Duty Free down 2.3% and Kweichow Moutai 0.8% lower.

Hong Kong shares erased early losses to end flat. Tech companies led the advance, with the Hang Seng Tech Index rising 0.8% to 3958.25. JD.com increased 4.0% and Baidu gained 2.8%. Property stocks were among losers. Country Garden Holdings dropped 5% and China Overseas Land & Investment was down 1.7%. The Hang Seng Index ended flat at 19978.25.

Japanese shares ended higher, led by chip stocks, as concerns over policy tightening by central banks and deteriorating corporate earnings were relieved. Advantest gained 5.5% and Renesas Electronics climbed 5.0%. The Nikkei Stock Average rose 0.7% to 29842.99.

Indian shares ended lower, dragged by falls in the auto and banking sectors. Investors have been weighing recent optimism over easing domestic inflation against lingering concerns over a potential global recession. The benchmark Sensex index closed down 0.7% at 61932.47. Automakers Tata Motor and Mahindra & Mahindra both lost 1.8%. Banks also weighed on the market, with HDFC Bank declining 1.8% and Kotak Mahindra Bank shedding 1.4%.

Europe

European stocks fell as investors worried about the US debt ceiling crisis. The pan-European Stoxx Europe 600 dropped 0.4%, the German DAX slipped 0.1% and the French CAC 40 shed 0.2%.

The United Kingdom’s FTSE 100 closed down 0.3% to 7751 points, in line with global peers, dragged by oil-exposed stocks. Vodafone was the worst performer with a 7.4% fall after the telecommunications group said its FY 2023 performance had not been good enough and announced a turnaround plan. Retailers were once again in red territory, with Ocado and Kingfisher down 3.9% and 3.0%, respectively.

"Markets in Europe tried to move higher in early trade, but turned lower during the afternoon session, with today's weakness coinciding with comments from Republican House Speaker Kevin McCarthy that no progress had been made on some of the key issues with respect to the debt ceiling," CMC Markets analyst Michael Hewson wrote.

Meanwhile, US and China retail sales data fell short of forecasts along with the ZEW German economic sentiment index. The UK unemployment rate unexpectedly rose.

North America

US indices retreated Tuesday with debt-ceiling negotiations remaining at a standstill, though growth stocks made some gains.

The S&P 500 slipped 0.6%, the Nasdaq Composite gained 0.2% and the Dow Jones Industrial Average dropped 1.0%, weighed down by Home Depot shares. The S&P 500's consumer discretionary, communication services and tech sectors rose.

Retail sales data released before the open showed Americans increased their spending modestly in April as inflationary pressures eased. Home Depot cut its forecasts for the year, sending its stock down 2.1%.

Warnings around the debt ceiling are growing louder. Treasury Secretary Janet Yellen has said the US could become unable to pay its bills as soon as June 1 if Congress fails to raise the federal borrowing limit. She doubled down on the severity of a potential debt ceiling mishap in Tuesday remarks to community bankers.

Investors say a default could have far-reaching and unpredictable effects for a financial system already trying to contain stress at regional banks, though a deal is still expected to avert that scenario.

Shares of Google parent Alphabet rose 2.6%, propping up the Nasdaq. A securities filing late Monday showed billionaire Bill Ackman's hedge fund, Pershing Square Capital Management, built a billion-dollar stake in the company during the first quarter.