Australia

Australian shares are leaning lower this morning following a downbeat day across global markets. Chinese economic data showed the services sector growing at a weaker pace than expected in June, which weighed on sentiment. Meanwhile, minutes from the latest Federal Reserve meeting confirmed that most officials expect the need to prolong their policy-tightening campaign.

ASX futures had given up 34 points or 0.5% as of 6:30am on Thursday, suggesting losses at the open.

Major US stock indices edged lower in a quiet trading session on Wednesday after the release of the Federal Reserve's June meeting minutes and weak economic data out of China.

The S&P 500 and Nasdaq Composite both slipped 0.2%, while the Dow Jones Industrial Average dropped 0.4%.

Nearly all Fed officials expect additional rate increases this year, according to the minutes, reinforcing market expectations. Fed staff said a recession remains likely, though its potential starting point has been pushed back.

Derivatives traders are currently pricing in an 88.7% chance of a Fed rate increase at its meeting later this month, unchanged from the probability before the minutes were released, according to CME Group.

In commodity markets, Brent crude oil gained 0.7% to US$76.75 a barrel while gold shed 0.5% to US$1,915.94.

Australian government bonds were little changed, with the 2 Year yield remaining at 4.06% and the 10 Year yield hinting down to 4.00%. US Treasury notes were higher, with the 2 Year yield jumping to 4.93% and the 10 Year yield rising to 3.93%.

The Australian dollar was off, at 66.56 US cents, down from its previous close of 66.90. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged up to 97.67.

Asia

Chinese shares ended lower amid losses across most sectors. Consumer and software stocks led the declines, with liquor maker Wuliangye down 1.7% and AI company iFlytek losing 2.65%. The energy sector was one of the sole gainers, with Yankuang Energy rising 3.1%. The downbeat finish came after Caixin China PMI data showed that service-sector activity growth cooled in June. The print showed that the sector's recovery continued but at a slower pace, Goldman Sachs analysts said in a note. China-US ties remain in focus ahead of the US Treasury Secretary's visit to Beijing and the latest bilateral trade curbs. The benchmark Shanghai Composite Index fell 0.7% to 3222.95. The Shenzhen Composite Index lost 0.8% and the tech-heavy ChiNext Price Index shed 0.9%.

Hong Kong stocks ended the session lower, snapping two days of consecutive gains as a wide range of sectors pulled back from their recent momentum. The benchmark Hang Seng Index declined 1.6% to 19110.38. Auto dealers led losses, with Zhongsheng Group slumping 5.3% after a broad rally since the end of June. Peers China Meidong and China Yongda fell 4.6% and 2.95%, respectively. Sportswear maker Li Ning slid 4.9% after Jefferies analysts warned of slowing sales in the industry. Developer Country Garden shed 4.9% and beer maker China Resources Beer was down 3.8%.

The Nikkei Stock Average of Japan closed 0.3% lower at 33338.70 as declines in retail and bank stocks more than offset gains in auto and shipping shares. Fast Retailing lost 2.5% after Uniqlo same-store sales for Japan dropped 3.4% in June year-over-year. Mitsubishi UFJ Financial Group shed 1.4%, while Suzuki Motor gained 3.0% and Mitsui O.S.K. Lines rose 3.6%. The broader Topix index ended flat at 2306.03.

India's Sensex index edged 0.05% lower to close at 65446.04, erasing earlier gains amid risk-off sentiment. China's June Caixin services PMI released today raised alarms over the country's deteriorating economic growth and the need for more stimulus, said Phillip Nova analyst Priyanka Sachdeva in an email. Among worst performers on the benchmark index, HDFC Bank dropped 3.2%, Housing Development Finance Corp. lost 2.9% and Bajaj Finserv was down 0.8%. Meanwhile, Maruti Suzuki India rose 3.6% and IndusInd Bank added 2.4%.

Europe

European stocks dropped after downbeat Chinese economic data and ahead of an expected lower US open. The pan-European Stoxx Europe 600 fell 0.8%, the German DAX dropped 0.6% and the French CAC 40 retreated 0.8%. Tech stocks were among the biggest fallers.

"A five-month low for China's Caixin services PMI knocked sentiment in Asia," IG analysts wrote. "US markets return from their holiday today and today's release of the latest Fed meeting minutes is likely to be the key event."

Meanwhile, the British FTSE 100 index closed down 1% to 7442 points on Wednesday, with almost all stocks in the red as global markets awaited potentially hawkish US Federal Reserve minutes, IG Group chief market analyst Chris Beauchamp said in a note. Retailer Ocado shares led the fallers, closing down 6.8%, followed by Prudential, down 3.9%. Pearson outperformed the index and closed up 2.45% after UBS raised the stock’s rating to buy from neutral.

North America

Major US stock indices edged lower in a quiet trading session on Wednesday after the release of the Federal Reserve's June meeting minutes and weak economic data out of China.

The S&P 500 and Nasdaq Composite both slipped 0.2%, while the Dow Jones Industrial Average dropped 0.4%.

Nearly all Fed officials expect additional rate increases this year, according to the minutes, reinforcing market expectations. Fed staff said a recession remains likely, though its potential starting point has been pushed back.

Derivatives traders are currently pricing in an 88.7% chance of a Fed rate increase at its meeting later this month, unchanged from the probability before the minutes were released, according to CME Group.

"Now the question is, 'How long will they have to keep rates above 5%?'" said Paul Mielczarski, head of global macro strategy at Brandywine Global Investment Management. "Previously markets were expecting a very quick reversal of this tightening cycle, with meaningful rate cuts by the second half of this year. Now that's really been pushed out by at least 12 months."

China's services sector expanded slower than expected last month, according to the Caixin China General Services PMI, contributing to a more cautious mood for stocks following Monday's upbeat session ahead of the July 4 holiday.

"China still plays a really critical role in terms of growth, so any disappointment has implications globally," said Hani Redha, a multi-asset portfolio manager at PineBridge Investments. "It's contributing to the loss of momentum and growth in Europe as well."

In the US, Meta Platforms was among the S&P 500's best performers. The social media giant's shares rose 2.9% ahead of the expected Thursday release of its Twitter competitor, named Threads. Meta shares closed at the highest level since early 2022.

Shares of Moderna advanced 1.5% after reports that it had signed a deal to work toward researching, developing and manufacturing medication in China. Snap rose for a ninth consecutive session, bringing gains over that period above 18%.

United Parcel Service shares fell 2.1% after the union representing many of its workers said labor talks had collapsed. Shares of Las Vegas Sands and Wynn Resorts also declined. Both were among the worst S&P 500 performers.

The largest technology companies are still responsible for the bulk of the S&P 500's 16% gain this year, but the index's summer rally has provided some positive signs for investors concerned with the index's recent lack of breadth. Gains were widespread in June, with 454 of the S&P 500 companies closing higher and all 11 sectors up on the month, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.