ASX futures had dropped 29 points or 0.4% as of 6:00am on Friday, suggesting a slump at the open.

US stocks and bond yields fell Thursday, pressured by weak corporate earnings and economic data that reinforced investors' recession fears.

The S&P 500 declined 0.6%, the Dow Jones Industrial Average shed 0.3% and the Nasdaq Composite fell 0.8%. All three indices are poised for modest weekly losses.

Ten of the 11 sectors in the S&P 500 notched declines, led lower by the real estate and consumer-discretionary segments, which fell more than 1%. AT&T stock dropped 10% after the telecom company said that the slowing economy is denting service demand from businesses. Tesla fell almost 10% after reporting a 24% first-quarter profit decline caused partly by price cuts.

Profits among companies in the S&P 500 are projected to fall 6.4% in the first quarter, compared with a 10% rise in last year's first quarter.

That tepid trend has deepened concerns that the Federal Reserve's effort to fight inflation by raising interest rates is pushing the economy toward a recession.

In commodity markets, Brent crude oil lost 2.5% to US$81.07 a barrel while gold gained 0.5% to US$2,004.09.

Australian government bonds edged lower, with the 2 Year yield at 3.18% and the 10 Year yield down to 3.49%. Meanwhile, US Treasury notes moved higher, with the 2 Year yield increasing to 4.17% and the 10 Year yield edging up to 3.55%.

The Australian dollar climbed to 67.37 US cents after previously closing at 67.11. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 95.94.

Asia

Chinese shares ended lower, dragged by a slew of sectors including auto makers. After Tesla announced price cuts for some models in the US, Tesla's rival BYD Co. dropped 2.3% and Great Wall Motor declined 3.1%. Travel stocks also underperformed with China Tourism Group Duty Free Corp. down 3.4% and BTG Hotels falling 2.1%. Gainers included chip makers and software companies. ZTE Corp. added 5.5% ahead of its Q1 earnings and Beijing Kingsoft Office Software rose 8.4% amid Thursday's AI-related stocks' rally. The Shanghai Composite Index ended 0.1% lower at 3367.03. The Shenzhen Composite Index fell 0.4% and the ChiNext Price Index dropped 1.2%.

Hong Kong's benchmark Hang Seng Index ended 0.1% higher at 20396.97, as sentiment recovered from consumption jitters associated with Anta Sports' selloff earlier in the week. New Oriental Education & Technology Group rose 12% after releasing better-than-expected Q1 earnings Wednesday. ZTE Corp. rose 6.5% ahead of its Q1 earnings release. AI-related stocks gained following peers listed in China. SenseTime Group ended 0.4% higher. Anta Sports ended the day up 0.3% after falling 12% earlier this week.

Japan’s Nikkei Stock Average closed 0.2% higher at 28657.57 as gains in electronics and financial shares helped offset losses in technology and trading houses. Keyence gained 1.7% and Mizuho Financial Group added 1.3%, while SoftBank Group dropped 1.6% and Mitsubishi Corp. shed 1.2%. The broader market index, Topix, ended flat at 2039.73. Investors remained focused on economic data, including U.S. weekly jobless claims and existing home sales data due later Thursday.

Indian shares rose slightly, led by gains in auto stocks, as hopes continued for earnings growth, thanks partly to recent easing of inflation. Tata Motors added 1.7% and Asian Paints (India) advanced 1.2%. Investors were focusing on earnings, with HCL Technologies set to report results later Thursday. The company ended flat. Meanwhile, the Sensex index edged 0.1% higher to 59632.35.

Europe

European stocks traded mostly lower as auto shares fell after Tesla signalled it would continue cutting prices. The pan-European Stoxx Europe 600 dropped 0.2%, the German DAX declined 0.6% and the French CAC 40 shed 0.1%. The negative reaction to Tesla's Q1 results, along with a pledge to cut prices further, weighed on European auto stocks over concerns that already thin margins will get even thinner, CMC Markets analyst Michael Hewson wrote.

"The fact that demand is falling for electric cars isn't helping either given that the economic case for owning one has declined along with falling petrol prices." Energy shares declined Thursday as oil prices fell.

Meanwhile, the United Kingdom’s FTSE 100 closed up 0.1%. Melrose Industries was the day's biggest riser, up 15%, followed by Segro and Haleon, up 3.6% and 2.9% respectively. DS Smith was the session's biggest faller, down 2.6%, followed by Smurfit Kappa, down 2.4% and Mondi, down 2.1%.

North America

US stocks and bond yields fell Thursday, pressured by weak corporate earnings and economic data that reinforced investors' recession fears.

The S&P 500 declined 0.6%, the Dow Jones Industrial Average shed 0.3% and the Nasdaq Composite fell 0.8%. All three indices are poised for modest weekly losses.

Ten of the 11 sectors in the S&P 500 notched declines, led lower by the real estate and consumer-discretionary segments, which both fell more than 1%. AT&T stock dropped 10% after the telecom company said that the slowing economy is denting service demand from businesses. Tesla fell almost 10% after reporting a 24% first-quarter profit decline caused partly by price cuts.

Profits among companies in the S&P 500 are projected to fall 6.4% in the first quarter, compared with a 10% rise in last year's first quarter.

That tepid trend has deepened concerns that the Federal Reserve's effort to fight inflation by raising interest rates is pushing the economy toward a recession.

"The tone of earnings reports has been pretty downbeat," said Edward Park, chief investment officer at London-based Brooks Macdonald. "It's not really pushing back against the recession narrative, and equally it's not endorsing it."

A smattering of new economic data Thursday suggested slowing growth. Initial jobless claims rose by 5,000 to 245,000, a sign of more slack in the job market. Manufacturing activity in April fell to the lowest level since May 2020, according to a survey of regional businesses by the Philadelphia Fed.

Turmoil in the banking sector last month broadly lowered traders' projections for how high the Fed will raise interest rates. Many are wagering another quarter-percentage-point rate increase in May will be the central bank's last rate increase for now, according to CME Group's futures-market tracker.

Yet investors who are hoping that the Fed will cut rates quickly later this year, a potential boon for the stock market, may be out of luck, said Amanda Agati, chief investment officer at PNC Asset Management. Inflation remains a pressing concern and it is too soon for the Fed to relax its stance, she said.

"We've been saying for a while now that the market is like a kid in a candy store, craving a sugar high from more policy accommodation," Ms. Agati said.

A continued flow of earnings from financial companies mostly disappointed investors, dragging down share prices. Private equity giant Blackstone fell 0.7%, Truist Financial declined 3.8% and KeyCorp, the parent company of KeyBank, fell about 2.8%.