Futures were indicating another fall at the open, with ASX futures 40 points or 0.6% lower at 6891 at 7:00am on Wednesday.

U.S. stock indexes closed down Tuesday, as investors took in earnings reports and economic data ahead of the release of inflation figures later in the week.

The S&P 500 fell 17.59 points, or 0.4 percent, to 4,122.47. The Dow Jones Industrial Average dropped 58.13 points, or 0.2%, to 32774.41, and the technology-heavy Nasdaq Composite tumbled 150.53 points, or 1.2%, to 12493.93.

On Wednesday, investors will get consumer-price data that could give them a sense of how the Federal Reserve might move on monetary policy at its next several meetings. In recent weeks, stronger-than-expected corporate earnings and robust labor-market data have quieted worries of an imminent U.S. recession, helping to lift stock markets from their lows.

In commodities, Brent crude oil fell 0.13% to $US96.52 a barrel and gold rose 0.31% to US$1,794.47.

Yields: Not much to report here other than that there was a little bit of steepening in the curve in Aus with the 2 year yield higher at 2.68% and the 10 year lower at 3.18%. Meanwhile, US 2 Year Treasury for the overseas market was at 3.28% and yield on 10 Year US Treasury increased to 2.79%. The yield curve is still inverted, a powerful signal of recession.

The Australian dollar plunged to 69.57 US cents from 69.84. The Wall Street Journal Dollar Index, which measures the U.S. currency against 16 others, slipped to 98.13.

Asia

Chinese shares gained, led higher by coal miners and renewable energy, even as pharma lagged. The Shanghai Composite Index rose 0.3% to 3247.43 on a fourth straight winning day. Coal miners have been moving higher this week, after domestic demand stabilised, and with Russia’s coal import ban with the EU looming; this may buoy global coking coal prices, according to Guotai Junan Securities. Yankuang Energy surged 5.3%, and China Coal Energy advanced 3.9%. Shanghai Fosun Pharma and Jiangsu Hengrui Medicine were the biggest losers among decliners, posting 2.5% and 2.0% drops, respectively. The Shenzhen Composite Index rose 0.2% and the ChiNext Price Index was up 0.7%.

Hong Kong’s Hang Seng Index slid 0.2% to 20003.44 as tech stocks extended declines and auto makers fell despite strong sales data. Investors are on the sideline amid the increasing geopolitical tension, KGI Securities says in a note. The fallout from last week's visit to Taiwan from US House Speaker Pelosi is keeping markets in the news. The Hang Seng Tech index, which dropped the most in almost two months on Monday, declined 0.9%. JD. com declined 3.7% and Meituan dropped 2.0%, but Alibaba Group rose 0.9%. Great Wall Motor declined 2.8% despite an 11% increase in July vehicle sales volume, and Geely Automobile shed 1.7% even though July sales soared 24%. China Unicom gained 4.0% after 1H profit swelled 20%. Chinese Estates advanced 6.9% following 1H profit swing guidance.

Japan’s Nikkei Stock Average finished down 0.9% at 27999.96 as concerns about inflation continued. Primary attention very much remains on U.S. CPI due out Wednesday, said Michael Hewson, chief market analyst at CMC Markets, in an email, referring to last Friday’s bumper jobs report that raised expectations the Fed still has scope to raise rates. Toyota continued to underperform on the Nikkei, falling 2.6%, while Tokyo Electron fell 8.2% after its 1Q net profit declined 12% on year and Daifuku lost 7.1% on its 1Q net profit decrease of 24.5%. The dollar changed hands at 135.02 yen, against 135.21 yen in Tokyo on Monday when the stock market closed. The 10-year Japanese government bond yield was 1bp lower at 0.160%.

Europe

European shares were mostly lower amid reports that Russian oil stopped flowing through a major pipeline to Central Europe. The pan-European Stoxx Europe 600 dropped 0.7%, the German DAX 30 lost 1.1% and the French CAC 40 gave up 0.5%.

“It’s been a mixed day for European markets with the DAX slipping back on reports that flows of oil through the Southern Druzhba pipeline, that services Hungary, Czech and Slovakia, has been suspended due to non-payment of transit fees,” said CMC Markets analyst Michael Hewson.

The FTSE 100 ended 0.1% lower on Tuesday as market participants waited for the U.S. inflation print on Wednesday. ‘The confidence has taken a hit this afternoon from the U.S. markets, with only the FTSE 100 offering a glimmer of hope on a difficult day for equities.” Concerns about another inflation-driven selloff in high multiple stocks have taken some of the gloss off the likes of the Nasdaq in particular, so we are seeing some of the earnings-based optimism start to die down ahead of tomorrow’s all-important U.S. inflation release," says Joshua Mahony, senior market analyst at online trading platform IG.

The day’s big loser was Abrdn, closing 6.8% lower after swinging to a first-half pretax loss.

North America

With inflation surging at a multi decade high, investors say Wednesday’s consumer-price index update will be crucial to the outlook for rates and the market.

“The market has been in a risk-on mode since the June lows, and clearly, investors believed that Chair [Jerome] Powell was more dovish than he wanted to be at the last F.O.M.C.,” Quincy Krosby, chief market strategist at LPL Financial, said. “But today’s market is tomorrow’s market. Wednesday's inflation data will give a good sense of whether this bear market is in the rearview mirror.”

Inflation is the No. 1 concern for the market, Krosby said, not merely whether it’s easing, but how fast it’s doing so.

Shares of Roblox, Coinbase Global and Wynn Resorts all declined in after-hours trading after reporting disappointing earnings. Micron Technology, the chip maker, fell 3.7 percent on Tuesday after issuing a revenue warning, one day after Nvidia delivered similar preliminary guidance.

Norwegian Cruise Line Holdings dropped nearly 11 percent after reporting a larger than expected quarterly loss. Shares of rival cruise line Carnival Corporation dropped 5.4% as certain segments of the travel business struggle to rebound from the pandemic. Investors are impatient for Walt Disney Co. to release results, which is expected after Wednesday’s close.

“Oil is still a market influenced by the near-term macroeconomic outlook,” said Robert Thummel, managing director and senior portfolio manager at TortoiseEcofin. “Worries persist that the Fed will press on slowing down the economy if (Wednesday’s) inflation data is stronger than estimates, but there is an ongoing idea of supply being underwhelming versus demand that is brisk for oil prices,” said Edward Moya, senior market analyst at OANDA.

U.S. labor productivity, meanwhile, fell for a second consecutive quarter, data released on Tuesday showed, and labor costs rose more than economists anticipated.