Australia

Australian shares are set to slip at the start of the week, following continued losses in the US with investor sentiments low after the Fed signaled it may not be done cutting rates last week.

ASX futures were down 18 points or 0.25% to 7086 as of 8:30am on Monday, pointing to a slip at the open.

US stock indexes edged lower Friday to end an ugly week after the Federal Reserve signaled it may not be done hiking rates.

The S&P 500 fell 0.2% Friday and closed down 2.9% for the week, its worst performance since March and third straight weekly loss. The Nasdaq Composite dropped 0.1% Friday, and logged its third consecutive week of losses, with tech shares bearing the brunt of the recent selloff. The Dow Jones Industrial Average was 0.3% lower Friday.

Treasury yields edged lower after closing at a 15-year high on Thursday. The yield on the 10-year bond fell to 4.438%, from 4.479% Thursday.

Yields have pushed higher since the Fed's Wednesday meeting, where chair Jerome Powell left the door open for another interest rate increase this year and said the central bank expects to keep rates higher for longer than it previously forecast to ensure inflation is under control.

In commodity markets, Brent crude oil rose by 0.47% to $US93.71 a barrel, Gold remained flat at US$1,926.07 and Iron ore rose by +2.95% to $US120.95 a tonne.

In local bond markets, the yield on Australian 2 Year government bonds remained flat at 4.06% while the 10 Year also remained flat at 4.3.4%. Overseas, the yield on 2 Year US Treasury notes edged higher to 5.11% and the yield on the 10 Year US Treasury notes retreated to 4.43%.

The Australian dollar rose marginally to 64.42 US cents from its previous close of 64.12 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies was flat at 99.66.

Asia

Chinese shares ended higher, snapping a three-session losing streak. China's August economic data provided welcome signs of stabilization and will likely continue to improve in 4Q, ANZ analysts said in a research note. "We see a soft landing in China," they add. AI stocks surged in today's session, with Suzhou TFC Optical Communication and T&S Communications rising 20% each, the daily maximum rise on the ChiNext market. Software makers and hardware companies also gained. iFlytek rose 6.1% and Foxconn Industrial Internet climbed 8.9%. Hangzhou HIK Vision Digital Technology added 4.0%. The benchmark Shanghai Composite Index ended 1.55% higher at 3132.43, the Shenzhen Composite Index gained 1.9% and the tech-heavy ChiNext Price Index rose 2.3%.

Hong Kong shares closed higher after turning positive at midday, reversing from opening losses amid possible bargain hunting by investors. China eased capital controls for foreigners in Shanghai and Beijing, which also supported sentiment. The benchmark Hang Seng Index rose 2.3% to 18057.45. Tech stocks led gains, with the Hang Seng Tech Index ending 3.7% higher. Netease added 6.2% and Alibaba rose 3.9%. The Hang Seng Mainland Property Index closed 2.2% higher, as Country Garden led gains with a 6.7% advance. Among decliners, Sinopham dropped 1.1% and Zijin Mining fell 0.3%.

Japanese stocks ended lower, dragged by falls in retail and pharmaceutical stocks, as concerns persist about inflation and higher borrowing costs. Aeon Co. dropped 2.5% and Otsuka Holdings lost 2.1%. Meanwhile, Nippon Television Holdings jumped 14% following its plan to make Studio Ghibli a subsidiary. The Nikkei Stock Average fell 0.5% to 32402.41. USD/JPY was at 148.19, up from 147.57 as of Thursday 5 p.m. Eastern Time, after the Bank of Japan kept rates unchanged, pouring cold water on expectations for a tighter policy. Investors are focused on US Treasury yields and economic data.

Indian shares ended lower amid negative sentiment fueled by volatility in global markets and geopolitical concerns. Investors are keeping an eye on the recent tensions between India and Canada over the killing of a Sikh separatist in Canada. There could be possible positive sentiment from the inclusion of Indian government bonds in JPMorgan's emerging market index. Biotech and pharmaceuticals led losses, with Dr. Reddy's Laboratories droppinng 2.3% and Cipla down 1.7%. Indusind Bank and State Bank of India were among the top gainers, rising 2.9% and 1.7%, respectively. Auto maker Maruti Suzuki rose 2.3%, while Mahindra & Mahindra rose 1.5%. The benchmark Sensex was down 0.3 % at 66009.15.

Europe

European stocks mostly dropped after downbeat UK economic data, though eurozone economic fortunes improved slightly versus a month ago. The Stoxx Pan-Europe 600 dropped 0.3%, the French CAC 40 fell 0.5% and the German DAX retreated 0.1%, though the FTSE 100 traded flat as sterling dropped against the dollar and euro. The HCOB eurozone composite PMI rose to a two-month high of 47.1 in September from 46.7 in August, albeit still representing contraction. Still, the S&P Global/CIPS UK composite PMI dropped to a 32-month low of 46.8 this month, from 48.6 in August. "It's clear from this morning's weak [UK] survey data that the effect of the [Bank of England's] prior interest-rate hikes is starting to bite," Mike Bell of JPMorgan Asset Management wrote.

The Bank of England left interest rates on hold on Thursday, helping to boost U.K. stocks, though sentiment remains cautious due to the risk of US interest rates staying higher for longer while concerns linger about a weak U.K. economy. Oil giant BP rose 0.7% while miner Glencore gained 1.4%. Retail and technology firm Ocado was the biggest gainer, up 5.4%, while Lloyds Banking Group gained 2.7%. These helped offset falls for many retail and real estate stocks.

North America

US stock indexes edged lower Friday to end an ugly week after the Federal Reserve signaled it may not be done hiking rates.

The S&P 500 fell 0.2% Friday and closed down 2.9% for the week, its worst performance since March and third straight weekly loss. The Nasdaq Composite dropped 0.1% Friday, and logged its third consecutive week of losses, with tech shares bearing the brunt of the recent selloff. The Dow Jones Industrial Average was 0.3% lower Friday.

Treasury yields edged lower after closing at a 15-year high on Thursday. The yield on the 10-year bond fell to 4.438%, from 4.479% Thursday.

Yields have pushed higher since the Fed's Wednesday meeting, where chair Jerome Powell left the door open for another interest rate increase this year and said the central bank expects to keep rates higher for longer than it previously forecast to ensure inflation is under control.

"The fear is that stronger-than-expected growth will force the Fed to maintain its restrictive stance for some time," said Art Hogan, chief market strategist at B Riley Wealth Management.

The prospect of a prolonged period of higher rates has investors trying to assess the impact of elevated borrowing costs on consumers and companies. Higher bond yields can also make riskier assets like stocks look comparatively less attractive.

That has investors pulling back on risk. US investors were net sellers of mutual funds and exchange-traded funds for the week ended Wednesday, withdrawing $16.8 billion, according to LSEG Lipper data.

"Hawkish Fed comments pushed investors to the sidelines," wrote Tom Roseen, head of research services at LSEG Lipper.

Conflicting economic reports are making it difficult to predict the Fed's path. The Labor Department reported initial jobless claims that came in below analyst estimates on Thursday, a sign of a still-strong job market. On Friday, S&P surveys showed the economy losing some momentum toward the end of summer, with an index tracking the US services sector slipping to an eight-month low.

"Mixed economic signals continue to befuddle central bankers and market participants alike," said James St. Aubin, chief investment officer at Sierra Mutual Funds. "This uncertainty is making it difficult for investors to make decisions."

Shares of financial technology companies took a hit this week, largely thanks to higher yields that are pushing up their borrowing costs and squeezing margins. Buy-now-pay-later company Affirm saw its shares drop 17% for the week, while competitor Block fell 15% to a three year low. PayPal shares dropped 10% on the week.

Elsewhere Friday, Ford Motor shares rose 1.9% after the United Auto Workers union spared the automaker from more walkouts based on progress in contract talks. Ford was among the S&P 500's best performers.

Seagen shares rallied 3.5% after the biotech company posted positive results from a Phase 3 study of a cancer-drug combination including its Padcev treatment. Meanwhile, shares of Activision Blizzard rose 1.7% after its acquisition by Microsoft cleared a regulatory hurdle in the U.K.

Oil prices edged higher, with Brent crude, the international benchmark, closing at $93.27 a barrel.