Australia

Australian shares are pointing to a weaker open on Wednesday following a mixed lead from US equities.

ASX futures are down 34 points, or 0.5%, as of 9am Wednesday, suggesting that the benchmark index will add to Tuesday's 0.1% decline when trading begins.

Australian inflation data for April is due for release during Wednesday's session, and RBA governor Philip Lowe is addressing a Senate Estimates hearing, potentially giving investors clues about the likely path for local interest rates.

On Wall Street, the blue-chip Dow Jones Industrial Average gave up about 0.1%, the broad-based S&P 500 inched up less than 0.1%, and the Nasdaq Composite rose 0.3% on continued enthusiasm for companies involved with artificial-intelligence.

In commodity markets, Brent crude oil fell 1% to $76.37 a barrel while WTI declines 0.7% to $72.13 a barrel. Gold rose to US$1,959.42

The 2 Year Australian Government Bond yield is 3.54% and the 10 Year yield is 3.63%.

The yield on the benchmark US 10-year Treasury note reversed course after climbing into the weekend. It ended Tuesday at 3.697%, down from 3.820% at the previous close. The yield on one-month Treasury bills dropped to 5.224%, from 5.496% before the debt deal.

One Australian dollar is buying 65.19 US cents.

Asia

Chinese shares reversed early losses to end higher, on a rally led by AI stocks following comments by a senior official on Monday. Zhao Zhiguo, Chief Engineer in the Ministry of Industry and Information Technology said Monday that China plans to use brain-computer interface to develop industries in the future. Software and hardware, and telecom stocks led the gains. Beijing Kingsoft Office Software rose 5.6%, China Telecom gained 3.3% and Hangzhou HIK Vision Digital Technology added 3.4%. Liquor stocks and banks declined. Kweichow Moutai fell 1.2% and Bank of China declined 1.3%. The Shanghai Composite Index closed 0.1% higher at 3224.21. The Shenzhen Composite Index rose 0.5% and the ChiNext Price Index ended 0.7% higher.

Hong Kong shares ended higher, reversing early losses on pessimism over the long-term growth of China's economy and intensified U.S.-China geopolitical tensions. The Hang Seng Index ended 0.2% higher at 18595.78, but was still lower than its level in November before China scrapped its strict zero-Covid policy. Auto makers and tech companies were higher. BYD rose 2.2%, partially reclaiming the previous session's losses. The Hang Seng Tech Index increased 1.5%, with Baidu rising 3.3% and Tencent Holdings up 1.0%. Energy stocks were among losers. China Shenhua Energydropped 1.0% and Yankuang Energy Group fell 2.2%.

The Nikkei Stock Average rose 0.3% to 31328.16, a new high since July 1990, as gains in electronics and auto stocks helped offset losses in insurance and retail stocks. Broader market index Topix fell 0.1% to 2159.22. Investors are focusing on U.S. economic data and any developments over a tentative debt-ceiling deal. The 10-year Japanese government bond yield fell half a basis point to 0.430%. USD/JPY was at 140.83, compared with 140.45 as of Monday 5 p.m. Eastern Time.

India's benchmark Sensex closed 0.2% higher at 62969.13 amid investor optimism. Sentiment was likely brightened, as investors were likely positive that a potential agreement over the U.S. debt ceiling seems to be within reach. Gainers included ITC Ltd,, which rose 2.3%, while Bajaj Finserv added 1.1% and Kotak Mahindra Bank gained 1.1%. Decliners included Tech Mahindra, which fell 1.3%.

Europe

European stocks fell as investors turn cautious amid uncertainty over whether a bipartisan deal to raise the US debt ceiling and avoid a default will be passed by Congress.

The Stoxx Europe 600 dropped 0.8%, the FTSE 100 declined 1.2%, the DAX fell 0.1% and the CAC 40 shed 1.2%.

A debt ceiling deal may have been agreed but there's "still a sense of unease" as markets await sign-off from Congress, AJ Bell investment director Russ Mould writes.

"Disquiet from various wings of the Democratic and Republican parties was enough to suggest that the agreement cannot be declared a slam dunk just yet, even if an eventual sign-off is by far the likeliest outcome."

North America

Tech stocks kept ticking higher and Treasury yields declined Tuesday following a tentative deal over the weekend to raise the US debt ceiling.

Investors are waiting to see if the agreement reached by President Biden and House Speaker Kevin McCarthy can be implemented by June 5, after which Treasury Secretary Janet Yellen said the U.S. would be unable to pay all of its bills on time. The next step is for the legislation to be passed by Congress, which could run into procedural hurdles and opposition from lawmakers.

The yield on the benchmark 10-year Treasury note reversed course after climbing into the weekend. It ended Tuesday at 3.697%, down from 3.820% at the previous close. The yield on one-month Treasury bills dropped to 5.224%, from 5.496% before the debt deal.

Stocks were mostly higher. Enthusiasm for companies involved with artificial-intelligence and the ongoing flight to the market's biggest tech stocks lifted the Nasdaq Composite, which rose 0.3%. The S&P 500 inched up less than 0.1%. The blue-chip Dow Jones Industrial Average gave up about 51 points, or 0.1%.

Nvidia, the chipmaker at the heart of the artificial-intelligence boom, was among the day's big gainers, rising 3%. At one point Tuesday, Nvidia's shares traded high enough to give the firm a $1 trillion market capitalization, the first semiconductor company to achieve that rare valuation.

Rival chipmakers Intel and Qualcomm increased 3.4% and 5.1%, respectively. Netflix and Tesla, two of the other big technology stocks that have dominated the market in recent years, each added more than 3%.

"Tech is trading like safety stocks because you had a bank crisis," said Alex Atanasiu, portfolio manager for Glenmede Investment Management.

Besides being reliable winners the past several years, taking a bet on the future profits of big tech firms like Microsoft and Apple becomes more attractive when interest rates are lower. Bank failures prompted investors to position for the Federal Reserve to pause or even reverse interest rate increases. That's made the market uncomfortably top heavy, said Atanasiu, who is telling his clients to diversify.

"If you go back 100 years, there were really only three periods the market was this concentrated: the Internet bubble, the 1920s and today," Atanasiu said.

Phil Blancato, chief executive of Ladenburg Thalmann Asset Management, said he too is leery of 2023's stock rebound, given how few stocks have been responsible for it.

"Cash is your friend right now, and dividend stocks" he said. "Be paid to wait around; there's too much uncertainty."

Energy shares, the worst-performing group in the S&P 500 this year, were the weakest group again Tuesday as fuel prices fell.