Australia

Australian shares are set to edge lower as US Stocks wobbled Thursday, as investor enthusiasm about a potential slowdown in interest-rate increases faded.

ASX futures were down 4 points at 7152 as of 7:00am on Friday, pointing to a slip at the open.

The S&P 500 fell 0.2% in afternoon trading, paring its steeper losses from earlier in the day. The benchmark gauge had lost 0.8% Wednesday, giving up some of the banner gains stocks posted last week. The technology-focused Nasdaq Composite bounced between slight gains and losses, and the Dow Jones Industrial Average added less than 0.1%. All three indexes remain up for November.

Stocks ripped higher last week when inflation data slowed, leading to hopes that the Federal Reserve would slow its campaign of interest-rate increases. Fed officials have pushed back at that suggestion, while strong economic data have further raised concerns the Fed will keep raising rates for some time to curb inflation.

In commodity markets, Brent crude oil tumbled 3.38% to $US89.72 a barrel, gold edged down 0.7% to US$1,760.94. Front-month futures contracts for West Texas Intermediate crude dropped to their lowest price in more than six weeks, even as US refineries are ramping up production and drawing down inventories, tightening crude supplies. Traders have pulled back as hopes for China's pandemic reopening have faded.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.10% while the 10 Year fell to 3.61%. Overseas, the yield on 2 Year US Treasury notes rose to 4.45% and the yield on the 10 Year US Treasury notes was down at 3.77%.

The Australian dollar hit 66.86 US cents down from the previous close of 67.41. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 99.63.

Asia

Chinese shares ended the session mixed, with the Shanghai Composite Index down for a second day amid rising Covid-19 cases in the country, which are testing Beijing's decision last week to ease some pandemic-related restrictions. Coal miners and auto makers dragged on the market, while software companies strengthened. Yankuang Energy lost 6.1% and China Coal Energy was 3.6% lower, while Great Wall Motor slid 2.9%. Among gainers, Yonyou Network advanced 6.7% and iFlytek was 2.5% higher. The Shanghai Composite Index fell 0.1% to 3115.43, the Shenzhen Composite Index gained 0.1% and the ChiNext Price Index closed 0.7% lower.

Hong Kong's Hang Seng Index is down 1.7% to 17950.33, following a decline in U.S. stocks overnight. Wall Street stocks fell as investors parsed stronger-than-expected retail sales figures, and comments from the Federal Reserve that UOB analysts say will likely underpin expectations that a pause in tightening is off the table. Decliners include Meituan, which is down 5.6% on news that Tencent Holdings will offload its $20 billion stake in the food-delivery platform. Tencent shares are down 2.5%. Alibaba Health Information Technology is also down, shedding 5.8%.

The Nikkei Stock Average ended 0.3% lower at 27930.57 amid heightened geopolitical tensions in the region after North Korea fired a ballistic missile off its east coast. Steel-related stocks were lower. Nippon Steel fell 1.3%, JFE Holdings shed 0.9% and Kobe Steel declined 1.1%. Developments relating to Japan's auto sector will likely be watched closely following local media reports that Japanese authorities are planning a mileage tax on electric vehicles. Toyota Motor edged 0.1% lower, Nissan Motor fell 1.8% and Honda Motor was off 0.4%. USD/JPY was last at 139.36, compared with 139.54 late Wednesday in New York. There were no trades for the newest 10-year Japanese government bonds.

Europe

European stocks traded mixed as investors reacted to the UK government's new fiscal plans and remarks from Federal Reserve official James Bullard. The pan-European Stoxx Europe 600 fell 0.4% and the French CAC 40 declined 0.5%. However, the German DAX rose 0.2% as Siemens jumps 6.6% after the engineering and technology group's 4Q results beat expectations.

"European markets have undergone another difficult session and look set to close lower for the second session in a row, after the latest UK budget painted a bleak outlook for the UK economy over the next two years, and the dollar jumped on hawkish comments from St. Louis Fed President James Bullard," CMC Market analyst Michael Hewson wrote.

In London, the FTSE 100 closed down 0.1% as U.K. Finance Minister Jeremy Hunt's new fiscal plan envisaged a difficult two years ahead for the economy.

"These measures will pile pressure on struggling consumers and deepen the U.K.'s recession, the first among major economies," eToro analyst Ben Laidler said in a note. Ocado was the session's biggest faller, down 8.6%, followed by Harbour Energy, down 5.9%, and Hargreaves Lansdown, down 4.8%. Centrica was the biggest riser, up 5.4%, followed by Lloyds Banking and Imperial Brands, up 3% and 2.7% respectively.

North America

Stocks wobbled Thursday, as investor enthusiasm about a potential slowdown in interest-rate increases faded. The S&P 500 fell 0.2% in afternoon trading, paring its steeper losses from earlier in the day. The benchmark gauge had lost 0.8% Wednesday, giving up some of the banner gains stocks posted last week. The technology-focused Nasdaq Composite bounced between slight gains and losses, and the Dow Jones Industrial Average added less than 0.1%. All three indexes remain up for November.

Stocks ripped higher last week when inflation data slowed, leading to hopes that the Federal Reserve would slow its campaign of interest-rate increases. Fed officials have pushed back at that suggestion, while strong economic data have further raised concerns the Fed will keep raising rates for some time to curb inflation.

Speaking Thursday, St. Louis Fed President James Bullard said interest rates have to rise higher to restrict the economy to an extent that brings inflation back to the Fed's target. Mr. Bullard didn't say a specific number, but a chart accompanying his remarks suggested the Fed's policy rate could rise to a range between 5% and 7%. The Fed this month raised its target rate to a range of 3.75% to 4%.

"A lot of the market's rally over the past week has been on expectations that the Fed will imminently pivot," said Edward Park, chief investment officer at Brooks Macdonald. "The Fed has made clear it won't do that."

Nonetheless, Mr. Park said that "if inflation starts to fade, the Fed will back off.... We just need a bit of time to work out if inflation has truly peaked, or whether the November figure, like the July number, is not truly reflective of the broader trend."

On the economic front, data showed 222,000 people filed for initial jobless claims last week. That is down by 4,000 from the week before and points to continuing strength in the labor market.

That stands in contrast with the growing wave of layoffs hitting the technology sector in recent weeks, and some analysts say it suggests more job cuts are to come. On Wednesday, Amazon said it plans to cut about 10,000 jobs, joining Facebook parent Meta Platforms in announcing layoffs.

"The market got ahead of itself in pricing in Fed rate cuts in 2023," said John Brady, managing director at futures brokerage R.J. O'Brien. "The fact of the matter is, it will be tough to see inflation collapse at the pace it rose in 2021 and 2022."