At 8.00 am on Friday, suggesting a small opening dip.
Abroad, the S&P 500 gained 1%. The technology-heavy Nasdaq composite gained 1.6%. The blue-chip Dow Jones Industrial Average got a 0.6% lift.
Investors have broadly slashed riskier assets in recent days, spurred by rising fears that the Federal Reserve's efforts to tame inflation will drag down the economy. Investors are increasingly pessimistic that the Fed can achieve a so-called soft landing, in which interest rates rise to reduce inflation without shoving the economy into a recession.
Mr. Powell raised such concerns in two days of testimony to lawmakers, acknowledging that a recession was a possibility and that a soft landing would be “very challenging.” During testimony before the House Financial Services Committee on Thursday, Mr. Powell said the Fed would be wary of cutting interest rates until there is clear evidence that inflation is falling.
Locally, the S&P/ASX 200 finished 0.3% higher at 6528.4 on Thursday, despite new selling of commodity stocks.
Gains in tech, financial and consumer-staples stocks helped the benchmark index to recover from Wednesday’s 0.2% slip and add 0.8% so far this week.
Commonwealth, Westpac, NAB and ANZ all gained in a range of between 0.2% and 1.1%, and WiseTech, NextDC and Block all rose between 3.1% and 4.7%.
Investors dumped shares of lithium, gold and iron-ore miners following a slew of target-price cuts and ratings downgrades issued by analysts at Goldman Sachs, Morgan Stanley and Macquarie.
Iron-ore majors BHP, Fortescue and Rio Tinto were down between 1.3% and 2.1%.
In commodities, Brent crude oil dropped 1.8% to US$109.75 a barrel. Iron ore rallied 6.1% to US$116.05. Gold futures fell 0.5% to US$1829.80.
Locally bonds also rallied on ambiguous growth expectations, the yield on Australian 2 Year government bonds dropped to 2.85% while the 10 Year closed fell to 3.85%. The yield on 2 year US Treasury notes declined to 3.01% and the yield on the 10 year US Treasury notes dipped to 3.09%.
The Australian dollar dipped to 68.94 US cents from 69.26 at the previous close. The Wall Street Journal Dollar Index, which measures the US dollar against 16 others, ticked up to 97.17.
Asia
Chinese stocks ended the day higher after President Xi reaffirmed his policy to deliver on China’s 5.5% GDP growth target this year despite a barrage of macroeconomic challenges, Oanda senior market analyst Jeffrey Halley wrote in a note. The Shanghai Composite Index finished up 1.6% at 3320.15, the Shenzhen Composite Index up 2.1% at 2164.01 and the ChiNext Price Index up 3.1% at 2760.10. Several sectors advanced on better sentiment, including autos and financials. Great Wall Motor rose 6.4%, while Dongfeng Motor was up 7.4%, China International Capital Corp. gained 4.3%, and CSC Financial Co. increased 10%.
Hong Kong shares finished higher, with the benchmark Hang Seng Index adding 1.3% to 21273.87. The market was supported by the incoming leader of the city, John Lee, saying he was formulating a plan to reopen the city’s borders, SPI Asset Management managing partner Stephen Innes said in a note. Chinese President Xi Jinping reaffirming his commitment to support economic growth was another broadly supportive factor, he added. The gains were broad-based, with Geely Automobile up 7.4%. Alibaba Group rose 6.4%, BYD Co. added 4.5% and Longfor Group climbed 4.4%. The Hang Seng Tech Index closed 2.3% stronger at 4655.91.
The Nikkei Stock Average rose 0.1% to 26171.25, buoyed by insurance stocks. Insurers Sompo Holdings gained 1.7% and Tokio Marine up 2.6%. Economic worries persist after US Fed Reserve Chair Powell admitted that high interest rates may cause recession. Toshiba rose 3.5% on a report that bidders might pay as much as Y7,000 a share to take the Japanese company private. Automaker Toyota opened lower and finished down 1.4% after it scaled back its global output plan for July.
Europe
European markets fell, pulled lower by mining, metals and banking stocks, while Wall Street was doing little. The pan-European Stoxx Europe 600 declined 0.8%, the French CAC 40 lost 0.6% and the German DAX fell 1.8%.
The U.K.’s FTSE 100 closed down 1 percent, dragged lower by oil and mining companies as commodities came under pressure on ongoing worries about a global recession. Mining giant Antofagasta was the day’s biggest loser, down 5.8%, as persistent weakness in base metals on fears over slowing demand weighs on the company, CMC Markets analyst Michael Hewson said in a note.
“The persistent weakness in base metals, particularly copper which is plagued by fears of slowing demand, is weighing on Antofagasta,” CMC Markets analyst Michael Hewson writes. “The fall in yields, and worries about a UK economic slowdown, is weighing on financials, with Barclays, NatWest and Lloyds Banking Group all on the back foot.”
British Land Co and Rolls-Royce were not far behind, shedding 5.5% and 5%, respectively. Ocado (+ 4.3%), Hikma Pharmaceuticals (+ 2.9%) and BT Group (+ 2%) were the biggest risers of the day.
North America
US stocks rose for a second day with Federal Reserve Chairman Jerome Powell testifying behind closed doors after warning that fast-rising interest rates were putting the economy at risk of recession.
The S&P 500 gained 1 percent on Thursday. The technology-oriented Nasdaq Composite Index rose 1.6%. The blue-chip Dow Jones Industrial Average added 0.6%.
Investors have generally sold riskier assets over the past few days, spurred by worries that the Federal Reserve’s attempts to curb inflation will hurt the economy. Investors are increasingly doubtful the Fed can deliver on a so-called soft landing, in which it raises interest rates enough to bring down inflation but not enough to tip the economy into a recession.
Mr. Powell acknowledged those risks in two days of testimony to lawmakers, acknowledging that a recession was possible and that soft landing would be “very challenging.” In testimony on Thursday before the House Financial Services Committee, Mr. Powell said the Fed would be hesitant to cut interest rates until clear evidence emerges showing inflation is coming down.
The Fed has “a limited window of opportunity” to raise rates, said Gerald Goldberg, chief executive officer of advisory firm GYL Financial Synergies.
A pronounced slowdown of the economy would place the Federal Reserve in an “impossible situation,” given how they attempt to strike their balance of addressing price stability while driving down inflation and raising employment, Mr. Goldberg said.
Second-quarter earnings will show whether the market looks set to persist in its downward trajectory, said Quincy Krosby, chief equity strategist for LPL Financial.
“The market is looking for when we get a signal that inflation has plateaued so it can evaluate the Fed’s reaction, but equally how corporates are navigating a slower economic backdrop,” Ms. Krosby said.
Layoffs -- one of the first signs of cracks in the labour market -- are still at historically low levels. The Labor Department reported that 229,000 Americans filed applications for unemployment benefits last week. US and European economies slowed this month, new figures showed, as soaring energy and food prices fueled greater threats of a global recession in the face of sky-high inflation and rising interest rates facing many major economies almost everywhere.
“Markets are in genuine disarray now,” said Stephen Innes, managing partner at SPI Asset Management. “I don’t think by any means the market is going into the bullish territory.”
In bond markets, Treasury yields fell for a second day but stayed near their highest levels in more than a decade. The yield on the benchmark 10-year US Treasury note slipped to 3.068% from 3.155% on Wednesday. When prices go up, yields go down.
In commodity markets, oil prices bounced back after steep declines Wednesday. Brent crude, the global oil benchmark, traded 1.5 percent lower at $110.05 a barrel. Other economically sensitive commodities also declined. Copper prices fell 4.9%.
A spike in energy prices has been a major driver behind the decades-high inflation now roiling world economies. Fear that demand for oil would wither during a recession was leading investors to sell the commodity, Mr. Redha said.
“I’ve said for some time there won’t be a bottom in equities without also a sustainable top in oil prices and bond yields,” he said. “I think that potentially is under way.”
