ASX futures were 80 points or 1.1% lower at 7083 at 7am AEST on Friday, pointing to a decline at the open.
Stocks dropped toward the end of the trading day on Thursday, as economic data suggested a strong labor market and also indicated that the economy could be growing more rapidly than had been anticipated.
The S&P 500 sank 1.5%, the Dow Jones Industrial Average dropped 1.1%, and the technology-heavy Nasdaq Composite dropped 2.3%. The United States markets had surged on Wednesday amid signs of renewed consumer confidence.
Stocks have been choppy in recent weeks. The Federal Reserve’s signal that it will continue raising interest rates to tamp down inflation and forecasts of a recession in 2023 have been a drag on the market.
Intermittent rallies have erupted as data showing slowing growth in consumer prices and the sense that the economy is proving resilient. Complicating things, a strong economy could push inflation to high levels, tempting the Fed to increase interest rates further and to hold them there for a long time than many investors would like.
Among commodities, Brent crude fell 0.84% to $US81.51 a barrel, and gold fell 1.41% to US$1,788.81.
In bond markets, 2-year Australian government bonds hit a high yield of 3.22% and 10-year bond yields at 3.79%. Across the ocean, the yield on 2 Year US Treasury notes fell to 4.26% and the yield on 10 Year US Treasury notes fell to 3.67%.
The Australian dollar fell from a prior close of 67.06 to 66.52 US cents. The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, rose slightly to 97.51.
Asia
Shares in China finished lower after briefly turning positive earlier in the day following an improvement in market sentiment on optimism around reopenings. Consumption and education shares led the gainers, after the education industry received more favorable policies in the past few weeks. Kweichow Moutai, a high-end liquor producer, advanced 1.7 percent, and Offcn Education Technology, a vocational training provider, jumped 10 percent to its daily limit. Chip makers were also among the losers, and Naura Technology Group fell 5.1 percent. The Shanghai Composite Index closed down 0.5% at 3054.43, the Shenzhen Composite Index fell 0.7%, and the ChiNext Price Index was down 0.4%.
Stocks in Hong Kong finished higher with most shares higher amid optimism about reopening in China resuming and Beijing shifted gears to a pro-growth approach. While the world's number two economy has been battered by huge Covid outbreaks, "providing support for the private sector is more important from the market's standpoint versus a near-term economic growth outlook," Stephen Innes, managing partner SPI Asset Management. The blue-chip Hang Seng Index gained 2.7% to 19679.22. Tech and consumption-related shares were led higher, with Meituan up 6.9 percent and Haidilao rose 7.6 percent. The Hang Seng Tech index was up 4.6%, and Hang Seng China Enterprises finished up 3.3%.
Stocks in Japan finished higher, with real estate and auto shares in the lead after recent selloffs, as concerns abated about increased borrowing costs. The yield on the 10-year Japanese government bond declined nine basis points, to 0.39 percent. Mitsui Fudosan rose 4.3 percent and Suzuki Motor added 3.0 percent. Toshiba Corp. rose 4.3% after a report that banks are structuring loan terms for a potential buyout that had been pitched by a group led by Japan Industrial Partners. The Nikkei Stock Average gained 0.5% to 26507.87.
Europe
European bourses also lost ground, with the FTSE 100 slipping despite fresh losses for the pound as the UK economy contracted by 0.3 percent in the three months to September -- a G7-worst for Q3, according to analysts. The pan-European Stoxx Europe 600, as well as the French CAC 40 and German DAX, each fell 1 percent; the British FTSE 100 inched 0.4 percent lower as the pound declined against the dollar and euro.
Inflation is still a "very real and current" economic threat in the UK, according to Principal Asset Management. The economy is contracting, interest rates are on the rise and fiscal policy is tightening, so it’s hard to see the outlines of a silver lining for the U.K. economy in 2023,” wrote Principal’s chief global strategist, Seema Shah.
North America
Stocks slumped late in the trading day on Thursday, as new economic data signaled a robust labor market and faster economic growth than expected.
The S&P 500 dropped 1.5 percent, the Dow Jones Industrial Average declined 1.1 percent, and the technology-heavy Nasdaq Composite lost 2.3 percent. It followed gains on Wall Street on Wednesday, when US markets were buoyed by evidence of renewed consumer confidence.
Stocks have been rocky in recent weeks. The Federal Reserve’s message that it plans to continue raising interest rates to tamp down inflation and predictions of a recession in 2023 have also hung over the market.
Intermittent rallies have been set off by signs that consumer-price growth is slowing and the economy remains resilient. Complicating things, a strong economy could fuel higher inflation, prompting the Fed to lift rates more and keep them at a higher level for longer — than many investors are hoping for.
“Once central banks pull the trigger, as they will do at some point next year as inflation recedes, that will put some more pep back into markets,” said Susannah Streeter, senior investment and markets analyst at UK brokerage Hargreaves Lansdown. Until then, she said, “that merry-go-round is spinning.”
Weekly numbers released Thursday showed that 216,000 people filed initial claims for unemployment benefits last week, an increase of 2,000 from the week before. Claims, considered a proxy for layoffs, have been around that level since May, a sign of ongoing strength in the labor market that could embolden the Fed to continue nudging up interest rates.
