Australia

Australian shares were unmoved Saturday morning as the US stock market ended Friday on a low note. After CPI and PPI data revealed ongoing inflation pressures, investors worried that interest rates will remain high.

ASX futures were flat as of 8:00am on Saturday.

US stocks mostly fell Friday as investors amped up bets on how far the Federal Reserve will raise interest rates in the coming months.

The S&P 500 lost 0.3%, its second down day in a row, and the tech-heavy Nasdaq Composite declined 0.6%. The Dow Jones Industrial Average opened lower, then recovered to close 0.4% higher.

The S&P 500 and the Dow ended the week with losses. The Nasdaq hung on for a weekly gain of about 0.6%.

Inflation data and commentary from Fed officials this week have damped the blockbuster rally that started the year. For weeks, stocks rose and yields fell as investors grew more hopeful about a slowdown in inflation and a likely end to interest rate increases. Many of the most speculative corners of the market outperformed, echoing moves recorded in 2020 and 2021.

Markets have quickly reversed course in recent days. Investors have gotten a wakeup call from some of the recent economic data, which has undercut the idea that the Fed is nearly done raising rates, and that the central bank could then cut them later this year. Two separate sets of inflation data this week came in hotter than economists had expected.

In commodity markets, Brent crude oil fell 2.44% to $US83.06 a barrel while gold gained 0.32% to US$1,842.28.

Australian government bonds edged higher, with the 2 Year yield climbing to 3.48% and the 10 Year reaching 3.81%. US Treasury notes also increased, with the 2 Year yield rising to 4.61% and the 10 Year up at 3.81%.

The Australian dollar was relatively unchanged at 68.79 US cents after previously closing at 68.78. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 96.90.

Asia

Chinese shares ended lower Friday following losses in regional markets. Investors retreated from China's post-reopening rally and began worrying about Sino-US tensions caused by suspected Chinese spy balloons. Telecom and software companies lead the losers. All three major Chinese telecom firms dropped over 2.6%. The country's AI-fever also cooled, which weighed on the broader software sector. iFlytek was 3.7% lower and 360 Security Technology shed 7.7%. Among the gainers were consumption stocks and energy companies. Cosmetic maker Yunnan Botanee Biotechnology Group rose 1.6% and Yankuang Energy Group increased 2.6%. The Shanghai Composite Index declined 0.8% to 3224.02. The Shenzhen Composite Index was down 1.2% and the ChiNext Price Index lost 2.5%.

Hong Kong's benchmark Hang Seng Index dropped 1.3% to end at 20719.81 on Friday, finishing the week 2.2% lower. Tech stocks weighed on the market with Hang Seng Tech Index dropping 2.5%. Baidu fell 4.6% and Xiaomi Crop was 3.35% lower. Financial stocks were broadly lower after China Renaissance said Chairman Bao Fan, a well-known dealmaker, had become unreachable, sparking speculation that Beijing may crack down on the financial industry. Shares of China Renaissance plunged as much as 50% and ended 28% lower while China Merchants Bank dropped 1.7%.

Japanese stocks ended lower, dragged by falls in tech and electronics stocks, after strong US inflation data raised fresh concerns about the Fed's further tightening. Rakuten Group fell 5.2% and Lasertec lost 3.3%. The Nikkei Stock Average shed 0.7% to 27513.13.

India's benchmark Sensex index closed 0.5% lower at 61002.57 as sentiment soured after higher-than-expected US PPI data, ICICI Direct Research analysts said in a note. The jump in US retail sales also added to worries that the Federal Reserve may not slow down its pace of rate increases, ICICI added. Declines were seen across sectors. Nestle India shed 3.1%, IndusInd Bank fell 3.0% and Mahindra & Mahindra declined 1.9%. Gainers included Larsen & Toubro, which added 2.2%.

Europe

European stocks fell as investors remained cautious about the interest rate outlook in the US and elsewhere. The pan-European Stoxx Europe 600 dropped 0.2%, while the French CAC 40 and the German DAX both shed 0.3%. Banks were among the biggest pan-European fallers, while energy stocks also lost ground.

"Equities look to be heading into the weekend on a largely downbeat tone, with recent concerns over slowing US disinflation shifting rate expectations," IG analyst Joshua Mahony wrote. "With markets now pricing in another 25 basis-point hike at each of the next three FOMC meetings, investors have begun scaling back exposure in anticipation of a potential market pullback."

The United Kingdom’s FTSE 100 closed down 0.1% on Friday in a record-breaking week that saw the market hit the 8000 mark before slipping back. Underperformance in the banking sector weighed on the index Friday as Barclays shares slid back following a set of disappointing numbers. NatWest Group has seen an underwhelming reaction to a strong set of full-year results, an increase in the dividend and a share buyback, CMC Markets UK Chief Market Analyst Michael Hewson said in a note. Segro finished the day as the biggest gainer, ending up 3.6%, while NatWest was the biggest faller, ending 6.9% down.

North America

US stocks mostly fell Friday as investors amped up bets on how far the Federal Reserve will raise interest rates in the coming months.

The S&P 500 lost 0.3%, its second down day in a row, and the tech-heavy Nasdaq Composite declined 0.6%. The Dow Jones Industrial Average opened lower, then recovered to close 0.4% higher.

The S&P 500 and the Dow ended the week with losses. The Nasdaq hung on for a weekly gain of about 0.6%.

Inflation data and commentary from Fed officials this week have damped the blockbuster rally that started the year. For weeks, stocks rose and yields fell as investors grew more hopeful about a slowdown in inflation and a likely end to interest rate increases. Many of the most speculative corners of the market outperformed, echoing moves recorded in 2020 and 2021.

Markets have quickly reversed course in recent days. Investors have gotten a wakeup call from some of the recent economic data, which has undercut the idea that the Fed is nearly done raising rates, and that the central bank could then cut them later this year. Two separate sets of inflation data this week came in hotter than economists had expected.

Expectations of a Fed pivot have all but evaporated. On Thursday, two Fed officials said they supported a larger rate increase at the central bank's February meeting than the quarter-percentage-point increase the Fed implemented. If strong data keep rolling in, the benign market conditions seen in January could be replaced by volatility of the sort experienced in 2022, some investors say.

"That first month was blockbuster. Everything went up. It didn't matter what you owned," said John Roe, head of multi-asset funds at Legal & General Investment Management. "Now it's all kicking off again."

Mr. Roe said investors are no longer asking whether there will be a recession or a soft landing in which inflation slows without a serious downturn in the economy. The debate, he said, now revolves around whether there will be "no landing." In this scenario, inflation would remain far above the Fed's target, encouraging the central bank to push interest rates much higher.

Some corners of the stock market continued their winning streak this week. Tesla notched a sixth consecutive week of wins, the longest such stretch since November 2021. Shares of Cisco Systems were headed for their best week since November 2020 in recent trading.