ASX futures were 52 points lower or 0.8pc at 6489 at 8.00am AEDT on Thursday, indicating a modest drop at the start.
Stocks plunged soon after trading began on Thursday and quickly regained much of the loss. The S&P 500 ended down 0.3 percent. The Dow Jones Industrial Average fell 142.62 points, or 0.5%, to 30630.17. The blue-chip index was also on track for a fifth straight day of losses. The tech-heavy Nasdaq Composite Index edged up 3.60 points, or less than 0.1%, to 11251.19. Major benchmarks were lower on Wednesday, a day after data showed inflation at a new four-decade high.
The earnings season for the second quarter ramped up on Thursday, with results from JPMorgan Chase and Morgan Stanley. JPMorgan Chase shares dropped $3.91, or 3.5 percent, to $108 after the bank said that it had put aside an additional $428 million to cover potential future loan losses, a sign that it had soured on the outlook for the United States economy. Net profit fell about 30%. The stock was among the biggest decliners on the Dow.
“We’re getting into the thick of earnings season right now and people are going to be rifling through those earnings reports looking for any sign of weakness or how companies are adapting to what they’re seeing in their own individual markets,” said Cheryl Smith, economist and portfolio manager at Trillium Asset Management.
At home, the S&P/ASX 200 closed up 0.4% at 6650.6 as materials and energy stocks went up on the back of better commodity prices. Iron-ore miners BHP, Rio Tinto and Fortescue rose 1.3%-2.5% to help lift the benchmark index despite a soft lead from US equities.
Lithium and several gold miners also advanced, and energy explorers Santos and Woodside climbed 1.45 per cent and 1.6 per cent. Whitehaven rose 6.5% and other coal miner New Hope advanced 5.7%.
Tech and consumer shares also advanced, but strength across the board was limited by financial and real-estate stocks.
Banks NAB, Westpac, Commonwealth and ANZ lost 0.5% to 2.2% by the close after data revealed Australia’s unemployment rate fell to a 48-year low in June.
In the commodities markets, Iron ore is down 8.4pc to $US 100.25 a tonne, Brent crude oil was up 0.17 per cent to $US99.74 a barrel, and gold was down 1.71% at US$1,705.80.
Yields on Australian 2 Year government bonds lifted to 2.55% and the 10 Year was 3.40%. Overseas, the 2 Year US Treasury notes rate upticked to 3.13% and the 10 Year US Treasury notes yield moved up to 2.96%.
The Australian dollar is 0.2% lower at 67.46 US cents at 6.30am AEST. The Wall Street Journal Dollar Index, which measures the dollar against 16 other currencies, reached a one-month high of 100.28.
Asia
Stocks in China generally finished higher. The benchmark Shanghai Composite Index fell 0.1 per cent at 3,281.74, while the Shenzhen Composite Index climbed 0.8 per cent higher at 2,192.70, and the ChiNext Price Index advanced 2.6 percent to 2,819.13. Among auto stocks, BYD Co. was 4.2% higher and SAIC Motor was down 1.1%.
Sentiment was also supported by news that China’s trade surplus in June swelled to $97.94 billion, its highest ever, OCBC analysts said in a note. “China’s 10.3 percent total trade growth for the first half of 2022 demonstrated that China maintained its share of global trade,” they added.
Hong Kong’s Hang Seng Index fell for a third consecutive session, losing 0.2% to 20797.95. Property developers were among the worst laggards, as tech shares rose. The real estate sector was rocked by new worries over unfinished construction in China, deemed by its own analysts to be a false scare. Country Garden skidded 8.5%.
Shares of the game developers Kingsoft and Bilibili rose 3.5 percent apiece after their games were part of the latest batch that authorities approved for release. Tencent Holdings, which didn’t appear on the list, slipped 0.7%. Tianqi Lithium erased steep losses early in its market debut to close unchanged.
Shares in Japan rose, lifted by power and auto stocks, as the impact of higher fuel costs faded. Tokyo Electric Power gained 5.3 percent and Honda Motor rose 2.5 percent. The Nikkei Stock Average added 0.5% to 26478.77.
Investors will also watch for U.S. inflation data later in the day. The U.S. dollar was last at 137.02 yen, from 136.86 at 5 p.m. Eastern Time on Tuesday. The yield on the benchmark 10-year Japanese government bond slipped one basis point, to 0.230 percent.
Europe
European shares fell in late trade amid political turmoil in Italy and fears of softer economic growth in the eurozone and soaring inflation dragged on markets.
“European markets have slid back sharply today on a combination of higher political risk in the euro-area as the Italian government looks set to fall, and the EU Commission downgraded its [euro-area] 2022 GDP forecast to 2.6% while upping its average inflation forecast for the year to 7.6%,” wrote CMC Markets analyst Michael Hewson.
Italian stocks slumped, with the FTSE MIB dropping 3.4% and leading the declines in European indexes, as the pan-European Stoxx 600 fell 1.5%, Germany’s DAX lost 1.9% and France’s CAC 40 shed 1.4%.
The FTSE 100 finished 1.6% lower on Thursday as the rampant dollar kept currency and commodity prices on the back foot. Bank profits were a bad omen of what to expect this earnings season, with the negative sentiment dragging down shares and commodities, and taking huge declines in FTSE-listed miners, IG Group senior market analyst Joshua Mahony said in a research note.
“However, for those worried about rising inflation, there may be some respite in the fact that today’s 3%-5% falls across the board for soft commodities, precious metals, and energy markets,” Mahony says.
North America
The S&P 500 ended lower for a fifth consecutive day after earnings reports from financial giants underscored worries about the economic outlook.
Stocks plunged at the open on Thursday, before staging a slow recovery. The S&P 500 ended down 0.3%, to 3790.38. The Dow Jones Industrial Average fell 0.5%, to 30630.17. The blue-chip index also posted its fifth consecutive day of losses. The technology-heavy Nasdaq Composite Index rose less than 0.1%, to 11251.19.
The second-quarter earnings season began in earnest Thursday, with quarterly reports from JPMorgan Chase and Morgan Stanley. More results from the nation’s leading banks were due on Friday and on Monday.
“We’re getting into the heavy-duty part of earnings season and folks are going to be parsing through those reports looking for any signs of softening or how companies are addressing what they’re seeing in their own particular markets,” said Cheryl Smith, an economist and a portfolio manager at Trillium Asset Management.
Shares of JPMorgan Chase were down $3.91, or 3.5 percent, to $108 after the bank said it had set aside another $428 million to cover possible future loan losses. The stock was among the biggest losers on the Dow.
“Sounds alarmist but automatically people don’t have the same kind of income and that has to affect the loan repayment... default risk could be even higher,” said Stephen Innes, managing partner at SPI Asset Management.
Morgan Stanley shares fell 29 cents, or 0.4 percent, to $74.69 after it reported a 29 percent slump in second-quarter earnings. Both banks posted earnings per share that trailed analysts’ estimates, indicating profit expectations are too high, according to Mr. Innes.
The KBW Nasdaq Bank Index declined 2 percent.
Investors also digested a fresh inflation reading showing producer prices rose in June. The producer-price index rose 11.3% last month from a year earlier, the Labor Department said.
The stronger-than-expected report raised fears that the Federal Reserve may be more aggressive in raising interest rates than forecast.
Fed governor Christopher Waller said Thursday he would support a 0.75-percentage-point interest-rate increase — though weaker-than-expected economic data might move him in favor of an even larger increase.
“When you start to make a list of downside risks... it might be a soft landing, it might be a hard landing,” said JP Morgan Chase Chief Executive Jamie Dimon.
The yield on the 10-year Treasury note was at 2.957% from 2.904% on Wednesday, and the two-year-note yield was flat. (When the yield curve inverts, it is typically considered a recession signal.)
“The Fed will continue to hike rates until they see clear evidence that the economy is rolling over,” said Charles Diebel, head of fixed income at Mediolanum International Funds.
New applications for unemployment benefits rose last week to the highest level this year, according to data released Thursday.
Shares of energy companies were the biggest losers in the S&P 500, falling 1.9%. Shares of Marathon Oil Corp. and Valero Energy Corp. fell 1.6%. Other commodity-related companies were also dragged lower: Shares of CF Industries and Mosaic fell 5.7 percent each.
The food company Conagra Brands was the biggest decliner in the S&P 500 following its latest earnings report. Shares fell $2.59, or 7.2%, to $33.15. The company said it anticipates additional price hikes in the months ahead.
