Australia

Australian shares are uncertain this morning following modest gains in the US and Europe. Investors adopted a broadly optimistic tone on Wednesday as firms continued to report strong Q2 earnings. Meanwhile, the United Kingdom saw significantly lower year-over-year inflation in June compared to the month before, raising hopes for less aggressive interest rate policy.

ASX futures were flat as of 6:00am on Thursday, indicating a quiet start to the session.

US stocks rose Wednesday, bringing an eighth consecutive day of gains for the Dow, as bank results and easing inflation overseas helped sustain the recent rally.

The Dow Jones Industrial Average added 109.28 points, or 0.3%, to finish at 35061.21 for its longest streak of gains since 2019. The broad S&P 500 index climbed 0.2%, led by real estate and utility shares. The tech-centric Nasdaq added less than 0.1%. Canada’s S&P/TSX finished up 0.6%, outpacing its US peers.

A pack of regional banks including US Bancorp, M&T Bank and Citizens Financial Group reported that deposits stabilized in the second quarter after March's string of bank failures. That helped ease investors' concerns that continuing outflows could ripple through the economy and make it harder for businesses and families to get loans. US Bancorp rose 6.5%, M&T added 2.5% and Citizens gained 6.4%.

In commodity markets, Brent crude oil dipped 0.3% to US$79.36 a barrel while gold stayed put at US$1,978.50.

Australian government bonds were lower, with the 2 Year yield declining to 3.85% and the 10 Year yield slipping to 3.86%. US Treasury notes were mixed, with the 2 Year yield increasing to 4.76% and the 10 Year yield edging down to 3.74%.

The Australian dollar declined to 67.72 US cents from its previous close of 68.10. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 95.28.

Asia

Chinese shares ended broadly lower as soft 2Q growth data continued to weigh on the market. China's "growth is slowing, global demand has faltered, the housing market is soft, business and household confidence is low, and local government debt is a growing concern," HSBC analysts said in a research note. Chip producers and automakers led the losses. Semiconductor Manufacturing International Corp. dropped 1.1% and Chongqing Changan Automobile declined 0.8%. Developers and consumer companies were among the gainers. China Vanke increased 1.5% and Midea Group rose 2.45%. The benchmark Shanghai Composite Index ended flat at 3198.84, the Shenzhen Composite Index declined 0.3% and the tech-heavy ChiNext Price Index was 1.1% lower.

Hong Kong shares ended lower, weighed by weak Chinese 2Q economic data earlier this week and the yuan's weakness against the dollar. However, stocks pared some of their losses in afternoon trade thanks to optimism that Beijing will introduce more stimulus. The Hang Seng Index ended 0.3% lower at 18952.31. Pharmaceutical companies and consumer brands led the losses. Wuxi Biologics dropped 2.0% and Haidilao International Holding fell 1.6%. Among the gainers were developers and telecoms; Longfor Group gained 2.5% and reclaimed some of Tuesday's losses while China Mobile advanced 0.9%.

Japanese stocks ended higher, led by gains in auto and shipping shares, as hopes continued for earnings growth and fears eased about the Federal Reserve's tightening. Nissan Motor gained 7.7% and Kawasaki Kisen advanced 6.3%. The Nikkei Stock Average rose 1.2% to 32896.03.

Indian stocks ended higher, extending their winning streak to five sessions. The benchmark Sensex index rose 0.5% to 67097.44, setting another closing record. Banks led gains as the financial sector continued to rally. IndusInd Bank rose 2.1%, State Bank of India climbed 1.55% and Kotak Mahindra Bank added 0.8%. Industrial companies further supported the market. Power producer NTPC advanced 2.9%, cement maker UltraTech Cement increased 2.0% and Power Grid Corp. of India gained 0.9%.

Europe

European stocks mostly rose after a mixed session in Asian markets. The pan-European Stoxx Europe 600 gained 0.3% and the French CAC 40 moved up 0.1%, but the German DAX shed 0.1%.

"Chinese markets fell again overnight, as worries about the outlook for that country's economy troubled investors," IG analysts wrote. "Other indices were more positive, with Japan's Nikkei 225 up 1.2% and the ASX 200 up 0.5%. Netflix, Tesla and Goldman Sachs are all on the schedule for earnings today."

Meanwhile, in London, the FTSE 100 surged 1.8% to 7588 points, reaching its best daily performance in the year so far. Housebuilders and real estate stocks led the index after better-than-expected UK CPI data, IG Group chief market analyst Chris Beauchamp explained in a note.

UK year-over-year inflation fell to 7.9% in June from 8.7% in May, increasing hopes that the Bank of England will end its rate hike cycle. Hargreaves Lansdown was the best performer of the day, closing up 8.8%, followed by home builder Persimmon and Land Securities Group, up 8.3% and 7.65%, respectively. On the opposite side, WPP shares led a short list of fallers, closing down 1.6%.

North America

US stocks rose Wednesday, bringing an eighth consecutive day of gains for the Dow, as bank results and easing inflation overseas helped sustain the recent rally.

The Dow Jones Industrial Average added 109.28 points, or 0.3%, to finish at 35061.21 for its longest streak of gains since 2019. The broad S&P 500 index climbed 0.2%, led by real estate and utility shares. The tech-centric Nasdaq added less than 0.1%. Canada’s S&P/TSX finished up 0.6%, outpacing its US peers.

A pack of regional banks including US Bancorp, M&T Bank and Citizens Financial Group reported that deposits stabilized in the second quarter after March's string of bank failures. That helped ease investors' concerns that continuing outflows could ripple through the economy and make it harder for businesses and families to get loans. US Bancorp rose 6.5%, M&T added 2.5% and Citizens gained 6.4%.

"I'm certainly breathing a sigh of relief that these regional bank earnings were much more comforting than many people were expecting," said Tim Horan, chief investment officer for fixed income at Chilton Trust. "It paints a picture that goes to the broader health of the economy: to better GDP and a better housing market."

Meanwhile, Goldman Sachs shares gained 1% even after the Wall Street heavyweight posted a steep drop in quarterly profit as it worked to exit its disappointing foray into Main Street banking. Some investors saw encouragement in its growing investment banking backlog.

A calmer financial sector backdrop and declining inflation in the US and abroad have combined to lift major indices to solid gains so far in the third quarter, extending a first-half rally that defied many investors' gloomy outlook at the start of the year. Most traders are counting on another quarter-percentage-point interest rate hike from the Federal Reserve next week, but fewer are betting on more increases after that. That is a boon to stocks following last year's shift toward higher interest rates and bond yields.

As corporate results continue to roll in, Wall Street analysts expect S&P 500 earnings to shrink by more than 6% in the latest quarter compared with a year ago, according to FactSet. For the full year, a resilient economy has fueled forecasts that the index's per-share earnings will be up slightly from 2022.

Meanwhile, price increases continue to cool off around much of the world. Inflation in the UK slowed to 7.9% in June, from 8.7% a month earlier. With headline US inflation now down to 3% -- in striking distance of the Fed's 2% target -- many investors have raised their bets that the Fed's campaign of rate increases will end without a serious recession.

"We're still basking in the afterglow of the past few months' inflation data," said Brent Schutte, chief investment officer at Northwestern Mutual. But Schutte noted that workers' wages are still charging higher. "I don't think the Fed will stop until they get what they want, which is lower wage growth," he said.