ASX futures were down by 42 points or 0.6 per cent at 7324 by 8.00 am AEST, indicating poor trading conditions ahead.

The S&P 500 and Nasdaq Composite dropped on Thursday as technology shares lagged the rest of the stock market.

The wide-ranging US stock index fell 1.4% while the tech-focused Nasdaq Composite fell 2.5%. The Dow Jones industrial average declined 0.5%, or just over 176 points.

Technology stocks have faced pressure to start the new year as government-bond yields have increased. Higher yields can diminish the allure of the future profits that many tech stocks are selling. The tech sector of the S&P 500 fell 2.2% on Thursday, widening its year-to-date decline to 5.2%.

The S&P/ASX 200 finished 0.5% up at 7474.4 led by energy and materials stocks which were up 1.5% and 2.6% respectively.

Iron-ore price gains benefited miners with Rio Tinto climbing 4.1%, and BHP settling 3.8% higher.

The biggest gainer of the day was Crown Resorts, which rose 8.8% after news that Blackstone had boosted its takeover bid for the company.

The biggest decliner in the session was Polynovo, which finished 10.1 per cent lower days after having soared more than 20 percent on a blockbuster update for the second quarter.

Abroad, the pan-continental Stoxx Europe 600 declined less than 0.1 percent. Most major benchmarks in Asia were lower. The Shanghai Composite Index was down 1.2% on worry over China’s latest Covid-19 outbreak after the port city of Tianjin reported an increase in infections. Japan’s Nikkei 225 fell 1%.

In commodities, gold futures fell 0.4% to $US 1820.60 an ounce; Brent crude slipped 1% to $US83.87 a barrel; iron ore slid 2.8% to US$127.95 a tonne. In bond markets the yield on the Australian 10-year bond nudged to 1.86%, while the yield on US 10-year Treasuries dipped to 1.70%.

At 8.00am AEDT the Australian dollar was trading at 72.75 US cents.00 am AEST, lower from 72.81 at the previous close. The WSJ Dollar Index, which compares the US dollar with 16 other currencies, slipped to 88.94.

Asia

Chinese shares ended lower, following widespread declines on other Asian stock markets. The Shanghai Composite Index dropped 1.2%, the Shenzhen Composite Index tumbled 1.7% and the ChiNext Price Index lost 1.7%. Chinese liquor makers were among the biggest losers as fears grew that sales would be weaker during next week’s Lunar New Year holiday because of China’s coronavirus outbreak. Kweichow Moutai dropped 4.6% and Wuliangye lost 4.1%. Concerns about Covid will likely remain, after the Chinese port city of Tianjin reported more infections on Thursday, despite a ferocious effort by authorities to snuff out the spread of the virus.

Hong Kong stocks closed modestly higher, with the market’s soaring momentum from Wednesday cooling. The benchmark Hang Seng Index rose 0.1%. Banks were among the stocks pushing higher again, with the sector still tracking up on hopes of a series of interest-rate increases this year. Both BOC Hong Kong and ICBC gained 2.0%, whereas HSBC Holdings climbed 1.7%. However, gains were somewhat tempered by weakness in tech stocks, which faced profit-selling pressure after large advances the previous session. Alibaba Health declined 7.0% and JD. com was down 3.9%.

The Nikkei Stock Average in Japan dropped 1.0% on concerns about surging Covid-19 cases and the strength of the yen. Japan’s daily cases were said to have topped 10,000 Wednesday, for the first time in more than four months, while Prime Minister Fumio Kishida said earlier this week that strict border restrictions would be kept in place until the end of February. Some of the worst performers included electronics stocks like Yaskawa Electric, which lost 6.1%, and Olympus which dropped 5.0%. Nippon Steel gained 5.0% and Sumitomo Metal Mining rose 5.5%.

Europe

European stocks finished little-changed, also following a muted morning in Wall Street. The pan-European Stoxx Europe 600 fell 0.05 percent.

Semiconductor makers and automotive stocks gained after Renault said it would go electric-only by 2030 and BMW said strong demand for electric cars would lift full-year sales. “After two days of gains a more cautious tone seems to be the order of the day across the markets, another indication that 2022 is not going to share 2021’s swashbuckling attitude to risk-taking,” IG analyst Chris Beauchamp writes. As the U.S. earnings season kicks in, equities are struggling to gain an upward traction, he adds.

In London, the FTSE 100 rose 0.2 percent as strength in financials helped offset a lackluster session for retailers. Shares in Barclays were up 2.5%, HSBC gained 2.4% and NatWest added 1.8%. In the other direction, Tesco and Marks & Spencer declined following trading updates. “It’s actually been a reasonable day of quarterly numbers for UK retail, although you wouldn’t know it if you were reading the share price pages this morning, with both Tesco and Marks & Spencer slipping back, although possibly that’s purely down to the fact that people were expecting too much,” CMC Markets analyst Michael Hewson said.

North America

The S&P 500 and Nasdaq Composite both declined on Thursday in a selloff in technology shares that dragged down the stock market.

The wide-ranging US stock index fell 1.4% and the tech-heavy Nasdaq Composite fell 2.5%. The Dow Jones Industrial Average dropped 0.5%, or roughly 176 points.

Technology stocks have faced headwinds in the new year as government-bond yields have climbed. Yields rising would make future earnings, offered by many tech stocks therefore, less attractive. The tech sector of the S&P 500 fell 2.2 percent on Thursday, bringing its year-to-date losses to 5.2 percent.

The biggest US stocks helped drag the market lower, with Apple shares down 1.5% and Microsoft shares down 3.8%. More economically sensitive areas of the stock market fared better, including the industrial sector of the S&P 500, which climbed 0.3%.

The yield on the benchmark 10-year US Treasury eased to 1.708%, compared with 1.724% Wednesday. It is still well above the 1.496% at which it finished 2021. Bond prices fall and yields rise.

When longer-term bond yields rise, “you have a tendency to reprice those growth stocks,” said Tom Hainlin, national investment strategist at US Bank Wealth Management. “If you raise that interest rate, that puts pressure on your present value of those companies.”

Trading has been erratic in recent days as investors watch for where stocks will go from here. The S&P 500 finished Wednesday 1.5% below its record after rising 27% last year.

Investors are paying close attention to any developments that feed into the Federal Reserve’s thinking on tightening monetary policy to curb inflation. Central bank officials have indicated that an interest-rate increase could arrive in as little as March. Four increases in 2022 are likely, the Fed’s James Bullard said on Wednesday.

On Thursday, Lael Brainard, a governor on the Federal Reserve, told Congress that quelling inflation was the central bank’s “most important task.” Ms. Brainard is the White House’s pick to be the Fed’s No. 2 official. The Fed’s rate-setting committee “has projected multiple hikes for the year,” she continued. “We will be able to do that when our asset purchases end. And we’re just going to have to see what the data calls for during the year.”

“The big story is what the market perceives for the next moves from a central bank. The market is compensating for two elements, less monetary policy support but in general the underlying economy is good and we believe that the earnings numbers which will start to come now will be quite strong,” said Luc Filip, head of investments at SYZ Private Banking.

Investors on Thursday took in data that showed new filings for jobless claims increased to a seasonally adjusted 230,000 last week, more than economists had predicted. A tight US labour market has kept applications close to pre-pandemic lows for the last two months.

Separate data showed that the prices suppliers receive from businesses and other customers moderated in December. The Labor Department said the index it uses to measure producer prices rose 0.2% in December from the previous month, the slowest rate since November 2020. “It is fitting into a broader story that inflation is probably peaking this quarter,” said Jack Ablin, founding partner and chief investment officer at Cresset Capital.

This week is the start of earnings season, as lenders like BlackRock, Citigroup, JPMorgan and Wells Fargo are scheduled to post results on Friday. Investors are jittery after Jefferies Financial Group reported revenue and earnings that fell short of analysts’ estimates on Wednesday, according to Jeffrey Meyers, a consultant at Market Securities.

Profits from companies in the S&P 500 are expected to have risen 22% in the fourth quarter compared to a year earlier, according to FactSet.

In individual stocks, Delta Air Lines was up 2.6 percent, despite posting a quarterly loss, after the airline’s chief executive said that he expected it to recover quickly from the effects of the variant Omicron. Shares of the home builder KB Home rose 16%, buoyed by earnings that beat analysts’ expectations.