Australia

The Australian market is set to open in the green on the back of Wall Street indices ending Tuesday mostly higher.

ASX futures were up 12 points or 0.2% at 7020 as of 7:00am on Wednesday, pointing to a rise at the open.

US stock indexes ended Tuesday mostly higher as investors parsed better-than-expected earnings from major retailers that showed consumers are still shopping despite high inflation.

The S&P 500 added 8.06 points, or 0.2%, to 4305.20 after opening lower. The technology-focused Nasdaq Composite shed 25.50 points, or 0.2%, to 13102.55. The Dow Jones Industrial Average gained 239.57 points, or 0.7%, to 34152.01.

Stocks have largely rallied in recent days, with the S&P 500 climbing for four straight weeks as of last Friday. Some investors view the rally as a sign of easing negative sentiment. Others believe that the momentum may be fading, citing recent weak data on China's economy and US manufacturing.

"Every time we're seeing a dip, the buyers show up, and I think that's more a reflection of the fact that far too many managers were way underweight equities for the reality and now they're chasing momentum," said Derek Amey, partner & co-chief investment officer of StrategicPoint Investment Advisors.

In commodity markets, Brent crude oil slipped 2.7% to $US92.49 a barrel, gold edged down 0.24% to US$1,775.38.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 2.69% while the 10 Year fell to 3.22%. Overseas, the yield on 2 Year US Treasury notes hit 3.26% and the yield on the 10 Year US Treasury notes was at 2.8%.

The Australian dollar hit 70.19 US cents flat from the previous close of 70.20. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 98.02..

Asia

Chinese shares ended higher as concerns over the slew of weak economic data released Monday eased somewhat. The benchmark Shanghai Composite Index added 0.1% to 3277.88, the Shenzhen Composite gained 0.4% to 2227.04 and the ChiNext Price Index rose 0.5% to 2731.39. Investors will likely keep a close watch on infrastructure-related sectors, following comments by officials from the National Development and Reform Commission that China would boost economic demand and accelerate infrastructure construction in 3Q. China Railway Construction lost 0.4% and Shanghai Construction Group gained 0.4%.

Hong Kong's Hang Seng Index fell 1.0% to 19830.52, as a tech selloff outweighed a rebound by property stocks. Meituan slumped 9.1% after a Reuters report that Tencent Holdings plans to divest most or all of its stake. Tencent rose 0.9%, while Alibaba Group declined 2.0%. Weimob slid 15% after its 1H loss widened and revenue weakened. The Chinese real-estate sector advanced amid news that state-owned China Bond Insurance Co. has been instructed to provide guarantees for onshore bond issuance by a few private developers. Longfor jumped 12% and Country Garden advanced 9.1%.

The Nikkei Stock Average closed flat at 28868.91 as falls in shipping and energy stocks offset gains in tech shares. Mitsui O.S.K. Lines dropped 4.1% and Idemitsu Kosan fell 2.1%. Meanwhile, Nippon Paint Holdings, exposed to China's property sector, rose 6.7%, along with a sharp rebound in Chinese real-estate developers. The broader market index Topix fell 0.2% to 1981.96. Investors remain focused on geopolitical developments around Taiwan, the war in Ukraine and their implications for global trade. USD/JPY was at 133.37, compared with 133.32 as of Monday 5 p.m. Eastern Time. The 10-year Japanese government bond yield fell 2.0 basis points to 0.165%

Europe

European markets rose, driven by mining stocks following upbeat results from the sector. The pan-European Stoxx Europe 600 gained 0.2%, London’s FTSE 100 advanced 0.4%, the French CAC 40 climbed 0.3% and the German DAX is up 0.7%.

Brent crude oil drops 2.7% to 92.57 a barrel. The Dow rises 0.7%. "European markets have continued to edge higher, with the DAX and FTSE 100 both eking out fresh two-month highs," CMC Markets analyst Michael Hewson wrote.

"A decent performance by the mining sector, with solid gains from Rio Tinto, Glencore and Anglo American, has helped the UK index. The catalyst for this was a bumper set of [annual] numbers from Australian miner BHP, which said it expected Chinese demand to pick up strongly."

North America

Investors might be realizing their bleaker outlook in recent weeks was overestimated, he said, noting that year-over-year inflation slowed in July and "hopefully has peaked."

Mr. Amey said his firm remains overweight in industrials and healthcare, and slightly underweight in technology and discretionary sectors.

Investors have been pleasantly surprised by earning reports from big-name retailers so far this week as they gauge how rising prices are affecting consumer spending. Walmart and Home Depot reported on Tuesday and Target and others are scheduled for later in the week.
"It's going to be about inventory levels, margins and pricing power and if consumers are still spending on discretionary, or if all their wages are going to food and energy," said Esty Dwek, chief investment officer at FlowBank.

Walmart rose $6.77, or 5.1%, to $139.37 after the big-box retailer reported earnings that beat estimates. The company also raised its outlook for the fiscal year, less than a month after it had issued a profit warning. Its CEO said the company had been able to cut costs in its supply chains.

Home Depot gained $12.77, or 4.1%, to $327.38 after the retailer posted record quarterly sales and earnings that beat Wall Street's estimates but also said customer transactions had declined. Target and Lowe's are set to report earnings Wednesday.

"I think there are some clues that the consumer is starting to say, how can I save some money and buy some of these cheaper items -- house brands versus some name brands," said Jon Maier, chief investment officer at Global X ETFs.

New data showed that housing starts in the U.S. declined in July from the previous month and were lower than economists had forecast.

Josh Jamner, an investment strategy analyst at ClearBridge, said he believed the fresh housing data would stoke continued recessionary fears.

"The cake is not baked," Mr. Jamner said. "There's certainly a path and a chance for the Fed to navigate us towards a soft landing. This incremental data point says OK, let's slightly back away from that soft landing outcome."