Australia

Australian shares are set to open lower, after US stocks ended the day slightly down on Tuesday.

ASX futures were down 0.3% or 23 points as of 8:30am on Wednesday, suggesting a lower open.

The Dow Jones Industrial Average ended higher on Tuesday and Treasury yields hit new five-month highs after Federal Reserve Chair Jerome Powell suggested that the central bank would likely need to wait longer to cut interest rates than it had previously anticipated.

Coming off its largest two-day decline since March 2023, the S&P 500 edged down 0.2%. The Dow snapped a six-day losing streak, rising 0.2%, or roughly 64 points. The Nasdaq Composite slipped 0.1%.

In commodity markets, Brent crude oil was down 0.1% to US$90.02 a barrel, while gold was up 0.1% at US$2,384.69.

In local bond markets, the yield on Australian 2 Year government bonds was up at 3.93% while the 10 Year yield was also up at 4.33%. US Treasury notes were up, with the 2 Year yield at 4.99% and the 10 Year yield at 4.67%.

The Australian dollar was 64.05 US cents down from its previous close of 64.41. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 100.66.

Asia

Chinese shares ended lower despite the upside surprise in 1Q GDP growth. A string of Chinese economic data released earlier showed an uneven revival across sectors, with retail sales and property the biggest drags, HSBC economists say. "It is clear that we are still not out of the woods," they add. Consumer-services and tech-software stocks led the losses. China Tourism Group Duty Free dropped 1.9% and Shanghai Jinjiang International Hotels was down 5.5%. Beijing Kingsoft Office Software shed 3.5% and Shanghai Baosight Software lost 1.05%. The benchmark Shanghai Composite Index ended 1.65% lower at 3007.07, the Shenzhen Composite Index declined 3.8% and the ChiNext Price Index was off by 2.0%.

Hong Kong's Hang Seng Index fell 2.1% to close at 16248.97 despite China's 1Q GDP growth beating expectations. Other Chinese economic data were less optimistic, says Zichun Huang, China economist at Capital Economics, noting that manufacturing investment slowed and the contraction in property investments deepened in March. Industrial production growth also missed expectations, with output nearly stagnant on month, which was disappointing, given export volume hit a new high last month, Huang adds in a note. Among the decliners, Sunny Optical Technology fell 6.4%, Sands China was 6.0% lower and Xinyi Solar shed 5.25%. Among the few gainers, PetroChina rose 0.7%, China Overseas Land & Investment added 0.2% and China Shenhua Energy edged 0.15% higher.

Japanese stocks ended broadly lower, dragged by sharp falls in real estate and financial stocks, as concerns persist over heightened tensions in the Middle East. Sumitomo Realty & Development dropped 4.8% and Nomura Holdings lost 4.5%. The Nikkei Stock Average fell 1.9% to 38471.20. Investors are focusing on developments in the Middle East and their impact on the yen and crude oil prices. The 10-year Japanese government bond yield rose half a basis point to 0.865%.

Indian shares ended lower, following their Asian peers, dragged by worries over geopolitical tensions in the Middle East. The benchmark Sensex lost 0.6% to 72943.68. Finance and bank stocks led losses. IndusInd Bank and Bajaj Finserv were down 3.1% and 2.3%, respectively. Among the few gainers, Zee Entertainment was in the lead, rising 4.05%. Titan Co. and Hindustan Unilever were up 1.3% and 1.2%, respectively.Jio Financial Services was 2.1% higher after media reports of a joint venture with BlackRock for wealth management in India. Investors are also waiting for U.S. home sales data due later this week.

Europe

European shares closed sharply down on Tuesday, with the pan-European Stoxx Europe 600 losing 1.53% to 498.21, the CAC 40 slipping 1.4% to 7,932.61 and Germany's DAX dropped 1.44% to 17,766.23.

The FTSE 100 closed down 1.8% Tuesday--the largest one-day point and percentage decline since July 6--as the prospect of Israel's response to Iran's attack over the weekend still lingered above markets and delays to U.S. rate cuts remained. "It's been a torrid day for London markets with the FTSE 100 slumping by almost 2% just days after flirting with record highs," AJ Bell analyst Dan Coatsworth says in a note. "Current geopolitical tensions mean surprises must be priced in, but with the cost of a barrel of Brent Crude staying helpfully below $90, the path to pivot in Europe does at least seem within sight," he says. Ocado was the session's biggest faller, down 5.8%. Croda International led the index, closing up 1.3%.

North America

The Dow Jones Industrial Average ended higher on Tuesday and Treasury yields hit new five-month highs after Federal Reserve Chair Jerome Powell suggested that the central bank would likely need to wait longer to cut interest rates than it had previously anticipated.

Stocks and bonds have both hit a rough patch ever since the Labor Department reported last week that the consumer-price index rose more than expected in March, marking the third consecutive month of firmer-than-expected inflation data. That has dented investors' conviction that interest rates would come down later in the year.

In recent months, Powell has signaled that the Fed would likely cut rates soon, suggesting that officials needed just a little more confidence that inflation was sustainably on the path to their 2% target. Speaking at a conference Tuesday, however, Powell said that recent data "indicate that it is likely to take longer than expected to achieve that confidence" and that current policies need "further time to work."

Stocks had been wavering all session before Powell spoke and continued their choppy trading during and after his remarks. Some analysts noted that Powell's comments didn't come as a surprise, mostly confirming what investors had already concluded after last week's economic data.

Coming off its largest two-day decline since March 2023, the S&P 500 edged down 0.2%. The Dow snapped a six-day losing streak, rising 0.2%, or roughly 64 points. The Nasdaq Composite slipped 0.1%.

Powell indicated that the Fed needs "more time until that first cut, but that has certainly been priced into the market," said Zach Griffiths, a senior strategist at the research firm CreditSights.

The good news for investors was that Powell didn't seem at all interested in raising interest rates, a scenario that analysts have deemed unlikely but had started to treat a little more seriously, Griffiths said.

The yield on the benchmark 10-year U.S. Treasury note again closed at its highest level since November. It settled at 4.657%, according to Tradeweb, up from 4.627% Monday.

Earnings reports helped boost the Dow industrials. UnitedHealth Group rose 5.2% after the healthcare giant reported better-than-expected first-quarter results.

Those earnings also provided a lift to other insurers, which have been hurt in recent months by investor worries about rising medical costs. Among that group, Humana climbed 0.9%, while Elevance gained 1.4%.

Bank earnings, meanwhile, continued to earn mixed reviews from traders. Morgan Stanley rose 2.5% after its first-quarter earnings showed a pickup in investment-banking revenue. But Bank of America shares dropped 3.5% after it reported an 18% drop in first-quarter profit.

Shares of smaller companies performed worse than those of larger businesses -- continuing a recent trend -- with the Russell 2000 edging lower.

Rate cuts would be especially helpful to smaller businesses, but "we just don't have any on the horizon," said Jack Ablin, chief investment officer at Cresset Capital.