Australia

Australian shares are set to slide following sharp falls on Wall Street as business activity slows and the stimulus stalemate drags on.

The Australian SPI 200 futures contract was down 55 points, or 0.9 per cent, to 5,850 points at 8.30am Sydney time on Thursday, suggesting a negative start to trading.

Wall Street’s main indexes fell sharply on Wednesday after data showing a cooling of US business activity and the stalemate in Congress over more fiscal stimulus heightened concerns about the economy while the coronavirus pandemic remains unchecked.

The Nasdaq and S&P 500 fell more than 2 per cent, and all 11 of the major S&P sectors closed lower. Energy—already the worst-performing sector this year—led the rout in its biggest single-day decline since 9 July.

The Dow Jones Industrial Average fell 525.05 points, or 1.92 per cent, to 26,763.13. The S&P 500 lost 78.65 points, or 2.37 per cent, to 3,236.92, and the Nasdaq Composite dropped 330.65 points, or 3.02 per cent, to 10,632.99.

The S&P/ASX200 benchmark index closed 139.8 points higher, or 2.4 per cent, to 5,923.9 on Wednesday. The All Ordinaries index rose 137.8 points, or 2.3 per cent, to 6,111.3.

Gold was down 2.1 per cent at $US1,859.61 an ounce; Brent oil was down 0.4 per cent to $US41.57 a barrel; Iron ore was down 3.0 per cent to $US113.81 a tonne.

Meanwhile, the Australian dollar was buying 70.72 US cents at 8.30am, down from 73.14 US cents at Wednesday’s close.

Asia

China stocks ended higher on Wednesday, underpinned by gains in tech-heavy start-up board ChiNext and healthcare shares, after the state planner said the country would accelerate development of coronavirus vaccines. 

At the close, the Shanghai Composite index was up 0.17 per cent at 3,279.71. The blue-chip CSI300 index was up 0.36 per cent at 4,652.33.

Hong Kong shares emulated Wall Street's rebound to end higher on Wednesday, though persistent investor concerns about the prospects of fresh Sino-US trade tensions and a slower-than-expected global economic growth capped gains. 

At the close of trade, the Hang Seng index was up 25.66 points or 0.11 per cent at 23,742.51, with the IT sector rising 1.24 per cent. The Hang Seng China Enterprises index fell 0.19 per cent to 9,558.78.

Japanese shares eased on Wednesday as the market caught up with the losses in global markets following the country’s long weekend, weighed down by fears about rising coronavirus infections and a delay in US fiscal stimulus.

Automakers and other value shares fell the most, but losses were capped as gaming companies and internet-related stocks outperformed on worries about the covid-19 pandemic.

The Nikkei share average shed 0.06 per cent on its first trade since Friday to 23,346.49. The broader Topix was down 0.13 per cent at 1,644.25.

Europe

European stocks rose on Wednesday, as a rebound in beaten-down travel stocks and gains for Adidas and other sports names took the edge off data that highlighted an uneven path for economic recovery in the euro zone.

With covid-19 cases rising again in Europe, countries including Britain reimposed restrictions to limit the spread of the virus, triggering the worst selloff in three months for the pan-European STOXX 600 benchmark on Monday.

The index closed 0.6 per cent higher, recovering for a second session from the losses, with London's FTSE 100 up 1.2 per cent, Germany's DAX gaining 0.4 per cent and France's CAC 40 rising 0.6 per cent.

IHS Markit’s survey released earlier showed euro zone business growth ground to a halt in September, as fresh curbs to quell a resurgence in covid-19 infections slammed the services industry into reverse, more than offsetting the strongest manufacturing growth in two years.

However, investors counted on further stimulus from central banks and governments to battle the economic fallout of the health crisis.

UK markets outperformed, with British finance minister Rishi Sunak looking to set out the future of the coronavirus job support package on Thursday, just weeks before the 52 billion pound ($93 billion) programme is set to expire.

Travel stocks rebounded after a four-day run of losses, with Germany's Lufthansa up 1.6 per cent after news the airline was planning to make rapid covid-19 antigen tests available to passengers in October.

Adidas jumped 4.4 per cent, while Puma and JD Sports gained about 4 per cent each after US sportswear maker Nike reported strong earnings and forecast better-than-expected sales for 2020.

Osram Licht surged 14.1 per cent after Austrian sensor maker AMS said it had signed a so-called domination and profit and loss transfer agreement as a key step towards closing its 4.6 billion euro ($7.6 billion) takeover of the German firm.

Danish pharmaceutical company Genmab fell 5.2 per cent after it said it was locked in a legal battle with its partner Johnson & Johnson over royalty payments for its key cancer drug.

Swiss drugmaker Roche slipped nearly 2 per cent as its experimental Alzheimer's drug failed to slow cognitive and functional decline in a trial.

North America

Hopes of a strong recovery and historic stimulus fuelled the US stock rally following the coronavirus-driven crash in March. But doubts over another relief bill and a sell-off in heavyweight technology-related stocks have weighed on sentiment since the market peaked on 2 September.

Wednesday’s plunge came six months to the day that US stocks on 23 March tumbled to their lowest point during the pandemic-induced selloff.

The economy is now levelling off at about 80 per cent of activity before the pandemic and won’t get back to normal until a vaccine is in place, said Jason Pride, chief investment officer of private wealth at Glenmede in Philadelphia.

“We’re at that phase where it’s harder to get that next bit of the recovery, that next bit of the reopening in place,” Pride said. “We’re still doing it, but the progress is way slower than it was in the first three months of the reopening.”

Investors are struggling to understand where to invest with mega-cap tech stocks trading well above their long-term fair value, but the deep-value stocks represent maturing industries, such as energy and brick-and-mortar banks, he said.

“We’re spending more of our time in that sweet spot in the middle to get away from the extremes of growth,” Pride said.

Federal Reserve Chair Jerome Powell said on Wednesday that the central bank was not planning any “major” changes to its Main Street Lending Program, while saying that both the Fed and Congress need to “stay with it” in working to bolster the economic recovery.

“The longer we go without more stimulus, the harder it will be to sustain the gains in the economy,” said Willie Delwiche, investment strategist at Baird in Milwaukee.

Data from IHS Markit showed gains at factories were offset by a slowdown in the broader services sector in September, suggesting a loss of momentum in the economy at a time when concerns are rising about a potential surge in covid-19 cases heading into the colder months.

Meanwhile, the US Justice Department unveiled a legislative proposal, which would need congressional approval, that seeks to reform a legal immunity for internet companies and follows through on President Donald Trump’s bid from earlier this year to crack down on tech giants.

Wall Street favourites including Apple, Google-parent Alphabet and Amazon.com, which have borne the brunt of recent losses, again declined at a rate exceeding losses of the benchmark S&P 500. A decline in Facebook came in below the S&P drop.

The S&P 500 skidded to lows last seen in late July and is now down 9.6 per cent from its record high hit three weeks ago. That puts it less than half a percentage point from entering corrective territory, as the Nasdaq did last week.

Tesla, another recent Wall Street darling, tumbled 10.3 per cent after chief executive Elon Musk failed to impress with his promise to cut electric vehicle costs at the company's much-awaited "Battery Day" event on Tuesday.

Nike surged 8.8 per cent to a record high after it reported that quarterly digital sales, especially in North America, helped offset a fall in sales at traditional brick-and-mortar stores.