Australia

Australian shares are set to edge higher after US stock indexes rose on Tuesday, continuing a market rally that propelled the Dow Jones Industrial Average to a six-week high.

ASX futures were up 53 points or 0.8% at 6845 as of 7:00am on Wednesday, pointing to a gain at the open.

The S&P 500 rose 1.6% on Tuesday while the tech-heavy Nasdaq Composite added 2.2%. The blue-chip Dow industrials advanced 1.07%.

Investors cheered earnings from large financial firms, sending stocks in recent days after months of falling on fears of rising interest rates and soaring inflation.

"We are seeing better-than-feared earnings reports, and Treasury yields are pulling back -- both are positives for the stock market," said Art Hogan, chief market strategist at B. Riley Financial Inc.

Data released Tuesday morning showed home-price growth slowed sharply, sending bond yields tumbling. Falling long-term yields propelled segments of the stock market most sensitive to interest rates. Shares of utilities and real estate firms -- that offer high dividends and sometimes compete with bond yields -- gained 1.7% and 3.4% as of early Tuesday afternoon, respectively.

In commodity markets, Brent crude oil slipped 0.3% to $US92.99 a barrel, gold edged up 0.2% to US$ 1,653.37

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.45% while the 10 Year fell to 4.07%. Overseas, the yield on 2 Year US Treasury notes rose to 4.57% and the yield on the 10 Year US Treasury notes was up at 4.09%.

The Australian dollar hit 63.83 US cents up from the previous close of 63.12. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 103.34.

Asia

Chinese shares ended mostly lower after briefly turning positive during the day, as market sentiment improved slightly after Monday's selloff. The tourism sector outperformed the market, with investors expecting China to gradually open its borders after March 2023. The Shanghai Composite Index ended flat at 2976.28, the Shenzhen Composite Index declined 0.5% and the ChiNext Price Index was 1.0% lower.

Hong Kong's Hang Seng Index ended 0.1% lower at 15165.59, weakening further after Monday's 6.4% slide and underperforming regional markets. HSBC lost 5.1% after posting a decline in 3Q profit, which was weighed by impairments and higher provisions. Among other lenders, Hang Seng Bank fell 3.8% and BOC Hong Kong slipped 3.3%. Property stocks were also lower, with China Overseas Land & Investment falling 5.5% and Sun Hung Kai Properties losing 3.1%. The Hang Seng Index may continue to face downward pressure, as investors seem to be leaning more toward US markets for now, IG market strategist Yeap Jun Rong says in a note.

Japanese stocks ended higher, led by gains in electronics and tech stocks, as hopes continued for the Fed's slower tightening. Keyence rose 2.9% and SoftBank Group gained 3.8%. Nidec Corp. surged 5.0% after its 2Q net profit rose 37% on year. The Nikkei Stock Average advanced 1.0% to 27250.28.

Europe

European stocks mostly rose as gains for tech stocks offset losses for banking and oil shares. The pan-European Stoxx Europe 600 and French CAC 40 advanced more than 1% and the German DAX climbed 0.9%.

In London, the FTSE 100 traded flat as sterling staged a recovery after the appointment of UK Prime Minister Rishi Sunak. Banks lost ground after HSBC reported lower 3Q profit and set aside $1.1B of provisions for expected credit losses. Still, Logitech, Netcompany and Nordic Semiconductor are among the biggest risers.

"Markets have continued their upbeat tone despite continued warning signs over the economic difficulties ahead," IG analyst Joshua Mahony wrote.

North America

US stock indexes rose on Tuesday, continuing a market rally that propelled the Dow Jones Industrial Average to a six-week high. The S&P 500 rose 1.6% on Tuesday while the tech-heavy Nasdaq Composite added 2.2%. The blue-chip Dow industrials advanced 1.07%.

Investors cheered earnings from large financial firms, sending stocks in recent days after months of falling on fears of rising interest rates and soaring inflation.

"We are seeing better-than-feared earnings reports, and Treasury yields are pulling back -- both are positives for the stock market," said Art Hogan, chief market strategist at B. Riley Financial Inc.

Data released Tuesday morning showed home-price growth slowed sharply, sending bond yields tumbling. Falling long-term yields propelled segments of the stock market most sensitive to interest rates. Shares of utilities and real estate firms -- that offer high dividends and sometimes compete with bond yields -- gained 1.7% and 3.4% as of early Tuesday afternoon, respectively.

"This is a pretty broad-based rally, but clearly the leadership is in rate-sensitive sectors," added Mr. Hogan.

Growth segments of the market also saw gains, as investors place more value on those companies' future earnings when interest rates are lower. Technology and consumer discretionary stocks rose 1.6% and 2.1%, respectively. Nearly all of the S&P 500 11 sectors were in the green, save shares of energy firms.

Higher mortgage rates crimped housing demand, denting red-hot home price inflation that has buoyed headline inflation measures.

Stocks turned higher following the data release because some investors saw the drop in demand as a sign that the Fed's monetary tightening is reining in inflation.

Hopes -- and bets -- are building that the Federal Reserve could be approaching a point at where the central bank feels comfortable easing the pace of interest rate increases. Fed officials are expected to raise interest rates by another 0.75 percentage point next week, but are also expected to debate a smaller increase toward the end of the year, offering investors hope that the worst could be behind them.

A slow down in the pace of rate-increases would not necessarily be indicative of a shift towards easy monetary policy, said Quincy Krosby, chief global strategist at LPL Financial.

"It would be very dangerous for the market to assume a 0.50-point rate-increase at the Fed's December meeting is a 'pivot,'" said Ms. Krosby, citing the Fed's speed in raising rates and "the lagged effect of rate increases that have yet to be felt in the economy."

Google parent Alphabet, Microsoft and Spotify are set to report results after markets close, setting the tone for a week of tech earnings with Apple, Facebook owner Meta Platforms and Amazon.com due to report later in the week.

The megacap technology firms set to report earnings could offer a barometer for US corporate health, especially with the future guidance they offer, Ms. Krosby said. Higher interest rates that proved to be a boon for bank earnings may have the opposite effect on rate-sensitive tech firms.

"We may have seen both inflation and fears of Federal Reserve tightening peak in recent weeks," said Mike Edwards, deputy chief investment officer at Weiss Multi-Strategy Advisers. "If regime change is a three-legged stool, the next component needed for a reversal in market-fortunes is corporate earnings."