Australia

Australian shares are set to edge higher after Wall Street gained on Monday. US stocks gained as investors focused on encouraging signs from corporate earnings and hoped for smaller interest-rate increases ahead from the Federal Reserve.

ASX futures were up 28 points or 0.4% at 6797 as of 7:00am on Tuesday, pointing to a gain at the open.

The Dow Jones Industrial Average was up more than 400 points, or 1.3%, to its highest level in six weeks. The S&P 500 advanced 1.2%. The technology-heavy Nasdaq Composite rose 0.9%, after starting the day in the red.

Last week, the Dow notched its best three-week stretch since November 2020, offering investors a reprieve from the selling pressure that has whipsawed portfolios this year. The rally was kicked off, in part, by a batch of corporate earnings -- particularly from banks and airlines -- that offered an encouraging outlook on the US economy. Stocks then raced higher on Friday after The Wall Street Journal reported that Fed officials are likely to consider the possibility of shifting to smaller interest-rate increases in December.

"Market participants are desperately looking for a Fed pause or pivot," said Chris Senyek, chief investment strategist at Wolfe Research.

In commodity markets, Brent crude oil fell 0.14% to US$93.37 a barrel, gold edged down 0.5% to US$ 1,649.48.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.5% while the 10 Year fell to 4.14%. Overseas, the yield on 2 Year US Treasury notes rose to 4.5% and the yield on the 10 Year US Treasury notes was up to 4.24%.

The Australian dollar hit 63.07 US cents down from the previous close of 63.78. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 104.28.

Asia

Chinese shares ended lower, with the Shanghai Composite Index closing below the widely watched 3000 level, as the country's leadership reshuffle weighed on investor sentiment. Military-linked companies were among the gainers amid speculation that the conflict between China and Taiwan may escalate in the coming years. The Shanghai Composite Index dropped 2.0% to 2977.56, the Shenzhen Composite Index declined 1.8% and the ChiNext Price Index was 2.4% lower.

Hong Kong's Hang Seng Index slumped 6.4% to 15180.69, its largest one-day percentage drop since November 2008, fueled by a tech selloff after the conclusion of China's party congress, where President Xi Jinping consolidated power. "It's relentless emotional selling all over the market," Grow Investment Group chief economist Hong Hao said on social media. Alibaba Group and Tencent Holdings each slid 11%, while Meituan dropped 15%.

Japanese stocks ended higher, led by gains in chip and shipping stocks, as hopes grew that the Fed will slow its pace of tightening. Renesas Electronics added 3.7% and Mitsui O.S.K. Lines climbed 4.1%. The Nikkei Stock Average rose 0.3% to 26974.90.

Europe

European stocks rose following a higher US open and the appointment of a new UK prime minister. The pan-European Stoxx Europe 600, German DAX and French CAC 40 gained more than 1%. Former UK finance minister Rishi Sunak won the race to become the Conservative Party's latest leader and UK prime minister, succeeding outgoing Liz Truss.

In London, the FTSE 100 closed up 0.6%. "Markets have signalled Rishi Sunak will be given time to deliver, with gilt yields falling and the British economy getting a tentative second chance to get back on track. But there's no getting away from the scale of the challenge that faces the new prime minister. The last few weeks have left the U.K. economy badly bruised, and the volatility of the pound today lays bare the huge task ahead," AJ Bell financial analyst Danni Hewson said.

Meanwhile, Pearson reported strong progress in the first nine months of the year, and that it expects to meet the full-year adjusted operating profit market consensus, with shares closing up 8.7%. Prudential on the other hand was the day's biggest loser, ending down 9.3%.

North America

US stocks gained on Monday as investors focused on encouraging signs from corporate earnings and hoped for smaller interest-rate increases ahead from the Federal Reserve.

In 4 p.m. trading, the Dow Jones Industrial Average was up more than 400 points, or 1.3%, to its highest level in six weeks. The S&P 500 advanced 1.2%. The technology-heavy Nasdaq Composite rose 0.9%, after starting the day in the red.

Last week, the Dow notched its best three-week stretch since November 2020, offering investors a reprieve from the selling pressure that has whipsawed portfolios this year. The rally was kicked off, in part, by a batch of corporate earnings -- particularly from banks and airlines -- that offered an encouraging outlook on the US economy. Stocks then raced higher on Friday after The Wall Street Journal reported that Fed officials are likely to consider the possibility of shifting to smaller interest-rate increases in December.

"Market participants are desperately looking for a Fed pause or pivot," said Chris Senyek, chief investment strategist at Wolfe Research. Still, he cautioned that such hopes would likely be dashed by continuing high inflation and low unemployment, which would pressure the central bank to maintain its hawkish stance. "We think a Fed pause is a long ways off," Mr. Senyek said.

Investors are looking ahead to a busy week of earnings results. Despite some early reports that have shown signs of optimism, fewer companies than usual are beating Wall Street's earnings expectations. Traders this week will parse reports from blue-chip companies including Coca-Cola and Boeing, in addition to megacap tech companies including Apple, Amazon.com and Google parent Alphabet.

US investors largely shrugged off geopolitical jitters from China, where Xi Jinping cemented his control over the ruling Communist Party by securing a third term and appointing a number of loyalists to the party's most powerful decision-making body.

US-listed shares of Chinese tech giants Alibaba and Baidu both dropped around 13%. As of midday, the selloff wiped out some $55 billion of market capitalization from the five largest US-listed Chinese companies.

Casino operator Las Vegas Sands, which owns properties in Macau, slid 11% in 4 p.m. trading, making it the worst performer in the S&P 500. Tesla shares slumped 1.5% after the company lowered prices for vehicles sold in China, the world's biggest electric-vehicle market.

"There is concern about the direction of US-Chinese relations, and I think that will continue to ripple through the market," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. But, she added, "As far as Wall Street is concerned, it's still fixated on what the Fed is doing."

Many investors expect the Fed to raise interest rates by 0.75 percentage point for a fourth consecutive time at its meeting next month. Most are now focused on what will happen in December. Federal-funds futures, used by traders to wager on the course of interest rates, on Monday afternoon showed a 43% chance that the central bank raises interest rates by a smaller 0.5 percentage point in December, up from 34% last week, CME Group data show.