ASX futures had lost 27 points or 0.4% as of 6:00am on Thursday, suggesting a negative open.
Tech companies including Microsoft Corp. were among the stock market's few bright spots Wednesday, as investors digested corporate earnings that offered mixed messages about the state of the US economy.
Major indices clawed back some of Tuesday’s losses Wednesday morning before slipping in the afternoon. The technology-heavy Nasdaq Composite rose 0.5% while the S&P 500 dipped 0.4% and the Dow Jones Industrial Average ticked 0.7% lower.
Those declines spanned trucking firms, energy producers and regional banks. Tech was the only sector in the S&P 500 to notch gains Wednesday, according to FactSet, climbing 1.7%.
The darkening outlook, which comes as corporate earnings season kicks into high year, contrasts with most companies reporting first-quarter performances that beat Wall Street's expectations. In the S&P 500, roughly 80% of the 163 firms that reported earnings as of Wednesday morning had outpaced analysts' projections, according to Refinitiv.
In commodity markets, Brent crude oil plunged 4.0% to US$77.52 a barrel while gold lost 0.5% to US$1,987.78.
Australian government bonds took a dive, with the 2 Year yield dropping to 2.97% and the 10 Year yield falling to 3.30%. US Treasury notes headed higher, however, with the 2 Year yield increasing to 3.94% and the 10 Year yield rising to 3.44%.
The Australian dollar backtracked to 65.93 US cents after previously closing at 66.24. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, moved down to 95.95.
Asia
Chinese shares ended broadly higher, breaking a five-session losing streak. Investors took a breather from the recent sell-off triggered by geopolitical tensions, the uneven domestic economic recovery and concerns over another Covid-19 outbreak. Traders were focused on the upcoming Politburo meeting, which is likely to map China's economic policies for the rest of the year. Auto makers and pharmaceutical companies led the gains. BYD Co. rose 2.7% and Shanghai United Imaging Healthcare increased 1.1%. Index heavyweight Kweichow Moutai added 0.8% after the liquor maker's solid Q1 earnings. Among losers were software makers and telecom firms. Beijing Kingsoft Office Software dropped 3.5% and China Mobile fell 4.3%. The Shanghai Composite Index ended flat at 3264.10. The Shenzhen Composite Index closed 0.5% higher and the ChiNext Price Index increased 1.5%.
Hong Kong's benchmark Hang Seng Index closed 0.7% higher at 19757.27 amid a mixed outlook. Investors considered the negative performance of major US stock indices and the earnings outperformance of Microsoft and Alphabet, IG market analyst Yeap Jun Rong said in a note. Gainers included Xinyi Solar, which rose 5.1%, BYD Co., which added 4.4%, and China Resources Beer, which gained 3.2%. Decliners included game company Netease, which fell 3.8%.
Japan's Nikkei Stock Average fell 0.7% to close at 28416.47, tracking Wall Street losses on Tuesday. Concerns about the US financial sector revived after First Republic Bank's earnings showed it lost a large amount of deposits, Phillip Securities Research team said in an email. Shimano slid nearly 12% after its Q1 net profit slumped 30% on year. Other underperformers included M3 Inc., which dropped 3.6%, Disco Corp., which fell 3.35%, and Lasertec, which was down 3.25%.
India's Sensex index ended flat at 60120.01 as gains in auto and tech stocks helped offset losses in industrial and financial shares. Tata Motors was 0.5% higher and Tata Consultancy Services added 0.8%, while Reliance Industries lost 0.7% and State Bank of India was 0.5% lower. Mahindra CIE Automotive was up 7.1% after its first-quarter net profit rose 73% on year. Earnings were in focus, with Maruti Suzuki India, SBI Life Insurance and HDFC Life Insurance scheduled to report their results later in the day.
Europe
European stocks fell as economic uncertainty continued to dampen the mood. The pan-European Stoxx Europe 600 dropped 0.9%, the French CAC 40 backtracked 0.9% and the German DAX shed 0.5%. Luxury goods stocks were among the biggest losers.
"European markets are once again on the back foot as concerns over the economic outlook continue to weigh on sentiment," CMC Markets analyst Michael Hewson wrote. "For today, the luxury sector appears to be seeing some profit-taking, with Kering lower along with LVMH, Hermes and Burberry weighing on the wider market."
Meanwhile, London’s FTSE 100 index closed down 0.5%. "The FTSE 100 is also under pressure with the weakness very much broad-based across various sectors, with defensives feeling the pressure along with cyclicals, and healthcare a particular drag," Hewson said. Persimmon ended as the biggest gainer, up 4.9%, while Spirax-Sarco Engineering was the biggest faller, ending 5.5% in the red.
North America
Tech companies including Microsoft Corp. were among the stock market's few bright spots Wednesday, as investors digested corporate earnings that offered mixed messages about the state of the US economy.
Major indices clawed back some of Tuesday’s losses Wednesday morning before slipping in the afternoon. The technology-heavy Nasdaq Composite rose 0.5% while the S&P 500 dipped 0.4% and the Dow Jones Industrial Average ticked 0.7% lower.
Those declines spanned trucking firms, energy producers and regional banks. Tech was the only sector in the S&P 500 to notch gains Wednesday, according to FactSet, climbing 1.7%.
The darkening outlook, which comes as corporate earnings season kicks into high year, contrasts with most companies reporting first-quarter performances that beat Wall Street's expectations. In the S&P 500, roughly 80% of the 163 firms that reported earnings as of Wednesday morning had outpaced analysts' projections, according to Refinitiv.
Part of the gloom stems from an emerging consensus that the Federal Reserve will continue raising rates next week. Investors are giving a roughly 75% probability that the central bankers will vote for another rate hike, according to CME Group, a move aimed at discouraging lending to businesses and consumers.
"That influences the economy, which then ripples through and influences earnings," said Jason Pride, chief of investment strategy and research at Glenmede.
Already, companies from Google parent Alphabet Inc. to shipping giant United Parcel Service Inc. have warned investors of petering US growth. Nevertheless, hiring has remained robust and the US service sector has proven resilient despite softening manufacturing activity and declining home sales.
The slowdown "is taking so long to play out that it's not fully reflected in the market," Mr. Pride added.
On Wednesday, technology firms largely shielded investors from steeper losses. Microsoft was the Dow's best-performing stock, jumping 7.2%, after reporting continued growth in its cloud-computing business and as the UK rejected its takeover attempt of game developer Activision Blizzard Inc.
Other big tech stocks were mixed as investors weighed new initiatives such as artificial intelligence against an uncertain economic outlook.
Shares in Alphabet dipped 0.1% Wednesday after the company reported a second consecutive quarter of declining ad sales. Amazon.com Inc., which is slated to report its first quarter results on Thursday, rose 2.3%. Facebook owner Meta Platforms Inc. traded 0.9% higher in the lead up to its earnings release after the close.
In other sectors, executives said that the Fed's attempt to cool inflation was beginning to take hold, contributing to investors pulling back from those stocks.
Shares in solar energy manufacturers slid Wednesday after Enphase Energy Inc. warned of waning appetite for investment in such systems. Enphase plunged 26%, making it one of the S&P 500's worst performers.
US central bankers have signaled that another rate increase is on the table next week, even amid growing fears of a recession and stress on regional banks. Some analysts said they believe regional banking stress in recent weeks is symptomatic of the Fed's rate hikes, rather than a systemic problem for the financial sector.
Shares in First Republic Bank on Wednesday tumbled 30%, extending a sharp selloff and leaving the beleaguered San Francisco bank with a market cap around $1 billion. PacWest Bancorp., meanwhile, jumped 7.5%.
