Australia

Australian shares are expected to decline today following losses in most global markets. In remarks to the US Congress, Federal Reserve Chairman Jerome Powell suggested monetary policy may need to be tightened further to address inflation.

ASX futures were hinting lower Thursday morning, having lost 9 points or 0.1% as of 7:00am.

A pullback in tech shares weighed on US indices Wednesday, a sign that investors were taking a breather after a multiweek rally that lifted the S&P 500 to its highest level in more than a year.

All three major indices fell for the third straight session on Wednesday, with the S&P 500 slipping 0.5% and the tech-heavy Nasdaq Composite dropping 1.2%. The Dow Jones Industrial Average gave up 0.3%, or about 102 points.

In commodity markets, Brent crude oil gained 1.7% to US$77.16 a barrel while gold dipped 0.2% to US$1,933.15.

Australian government bonds edged lower, with the 2 Year yield dipping to 4.10% and the 10 Year yield declining to 3.98%. US Treasury notes were higher, with the 2 Year yield rising to 4.71% and the 10 Year yield increasing to 3.72%.

The Australian dollar climbed to 67.96 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 96.54.

Asia

Chinese shares ended lower in the last trading day of the week ahead of the Dragon Boat Festival. Market sentiment was weak as almost all sectors retreated, though investors expect more rate cuts and industrial policies to boost the country's lagging economy in coming weeks. Software makers and hardware companies led the losses. iFlytek dropped 3.9% and Foxconn Industrial Internet was down 5.9%. Consumption firms were also lower, with Proya Cosmetics declining 3.0%. The Shanghai Composite Index dropped 1.3% to 3197.90 and finished the week 2.3% lower. The Shenzhen Composite Index also declined 1.95%, while the ChiNext Price Index was down 2.6%.

Hong Kong shares ended lower, extending recent losses amid a lack of concrete stimulus policies from Beijing. The Hang Seng Index fell 2.0% to 19218.35. Tech companies led losses, with the Hang Seng Tech Index down 2.8% at 3961.58. JD.com dropped 4.7% and Meituan slid 3.55%. Consumer-goods stocks also weighed on the market. Anta Sports retreated 5.5% and Li Ning fell 5.4%. Automakers were one of the few bright spots after China unveiled EV tax breaks. NIO advanced 4.0% and Xpeng rose 2.2%.

Japan's Nikkei Stock Average rose 0.6% to close at 33575.14 in a likely technical rebound following losses earlier in the session. The Nikkei has retained some strength, as its relative strength index has managed to retreat from overbought to more neutral territory without much of a dip, IG market analyst Yeap Jun Rong wrote in an email. The best performers on the benchmark index included T&D Holdings, which rose 3.8%, SoftBank Group, which added 3.7%, and JAL, which was 3.4% higher.

India's benchmark Sensex index closed 0.3% higher at 63523.15 after hitting a record high earlier in the session. Indian equities have seen solid gains the last couple of months, boosted by a robust economic outlook, as well as an improved earnings outlook for local companies, explained Axis Securities Chief Investment Officer Naveen Kulkarni. Gainers included Power Grid Corp, which added 3.7%, while HDFC Bank gained 1.7% and Housing Development Finance Corp. was 1.7% higher. Decliners included Mahindra & Mahindra, which fell 1.6%.

Europe

European stocks fell Wednesday after UK inflation topped expectations, leaving investors uncertain about the outlook for interest rates. The pan-European Stoxx Europe 600, the German DAX and the French CAC 40 each dropped about 0.5%.

UK headline CPI inflation stayed unchanged, rather than falling as markets had anticipated, while core inflation unexpectedly rose. "Markets are edgy following more bad news on UK inflation that has further scrambled expectations for Bank of England rates," Evercore analysts said in a note.

London’s FTSE 100 index continued to fall and closed Wednesday down 0.1% to 7559 points, dragged by house builders. "The Bank of England is expected to pull the trigger on another rate hike tomorrow, with some suggesting that we might see a 50 basis points hike, instead of the 25 basis points that is currently expected," CMC Markets analyst Michael Hewson wrote. Packaging stocks DS Smith and Smurfit Kappa led the list of underperformers, closing down 6.0% and 5.5%, respectively, after disappointing 1H sales numbers from Austria's Mayr-Melnhof, Hewson explained.

North America

A pullback in tech shares weighed on US indices Wednesday, a sign that investors were taking a breather after a multiweek rally that lifted the S&P 500 to its highest level in more than a year.

All three major indices fell for the third straight session on Wednesday, with the S&P 500 slipping 0.5% and the tech-heavy Nasdaq Composite dropping 1.2%. The Dow Jones Industrial Average gave up 0.3%, or about 102 points.

Investor enthusiasm about artificial intelligence has boosted shares in mega-cap technology companies in recent weeks, helping power indices higher. But those tech companies were among the worst performers on Wednesday. Microsoft, Alphabet and Meta Platforms fell between 0.9% and 2.1%. Chip makers also dropped, with Nvidia losing 1.7% and Advanced Micro Devices sliding 5.7%.

Despite the declines, investors and analysts generally remained calm, arguing that tech stocks in particular were due for some consolidation after their outsize recent gains.

"I think it's really just technicals at this point" rather than any change in business or economic fundamentals, said Josh Emanuel, chief investment officer at Wilshire. "You've seen tremendous outperformance of technology and growth-related stocks" relative to stocks more closely linked to economic growth, he added.

Indicating the narrowness of Wednesday's declines, six out of 11 S&P 500 sectors ended up higher on the day. Health insurers were a particular bright spot, with UnitedHealth Group rising 1.6% following its declines last week when company executives warned about increasing demand for elective procedures.

The disparate stock market moves came as Federal Reserve Chair Jerome Powell delivered testimony before a congressional committee, reiterating that the central bank remained focused on bringing inflation back to its 2% target, with one or two more rate increases likely even after officials left rates unchanged at their most recent meeting.