Australia

Australian shares are set to edge higher after Wall Street rose on Monday. Investors in the US have their eyes on the US Federal Reserve interest rate decision on Wednesday, and on the Bank of England decision on Thursday.

ASX futures were up 53 points or 0.78% at 6774 as of 7:00am on Tuesday, pointing to a gain at the open.

Major US stock indexes perked up on Monday as investors looked ahead to the Federal Reserve's interest-rate decision and fretted about the health of the U.S. economy.

The S&P 500 gained 0.7%, snapping a two-session losing streak. The Dow Jones Industrial Average advanced 0.6%, while the technology-focused Nasdaq Composite rose 0.8%. The indexes opened lower on Monday morning but swung into positive territory as the closing bell approached.

This week, investors are largely focused on a round of interest-rate decisions by central banks. The Fed's decision will be followed Thursday by the Bank of England.

"We're afraid that the Fed could surprise us with another jumbo hike," said Florian Ielpo, head of macro at Lombard Odier Investment Managers. Last week's corporate warnings, he said, suggested "we very well could be at the entry point of the US recession."

In commodity markets, Brent crude oil rose 0.54% to $US91.84 a barrel, gold was flat at a gain of 0.03% to US$1,675.53.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.13% while the 10 Year fell to 3.67%. Overseas, the yield on 2 Year US Treasury notes rose to 3.94% and the yield on the 10 Year US Treasury notes was up to 3.49%.

The Australian dollar hit 67.22 US cents up from the previous close of 67.17. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies was flat at 101.50. 

Asia

China stocks ended the session lower, tracking widespread weakness in equities amid growing recession worries and rising interest rates. The benchmark Shanghai Composite Index edged down 0.3% to settle at 3115.60, while the Shenzhen Composite Index fell 0.8% to 1990.36. The tech-heavy ChiNext Price Index lost 0.7% to end at 2350.38. Software developers led the downturn, as the sector retreated from gains late last week after a new cybersecurity policy draft boosted investor sentiment for the industry. China National Software & Service shed 1.6% and Yonyou Network Technology fell 7.7%.

Hong Kong's Hang Seng Index fell 1.0% to 18565.97, further approaching the March 15 closing low of 18415.08, as sentiment toward China's property sector remains subdued. Official data show that the overall disappointing trend in property-related activities continued in August, Nomura analysts say in a note. Longfor Group fell 6.0% and Country Garden Holdings lost 3.3%. China Vanke ended 1.2% lower amid news its property-management arm Onewo Inc. plans to raise up to US$783.6 million in a Hong Kong IPO. Hong Kong retailers and airline Cathay Pacific rose amid hopes the city's pandemic-related travel restrictions might be eased further. Chow Tai Fook Jewellery jumped 6.2% and Cathay Pacific gained 1.1%.

Japanese stocks ended lower, dragged by falls in electronics stocks, on persistent concerns about aggressive Fed tightening. Tokyo Electron Ltd. dropped 4.3% and Keyence lost 3.7%. Meanwhile, bank stocks ended higher thanks to gains in US Treasury yields. Resona Holdings climbed 3.6% and Sumitomo Mitsui Trust Holdings rose 1.8%. The Nikkei Stock Average fell 1.1% to 27567.65.

Europe

European stocks were mixed in trade yesterday. The pan-European Stoxx Europe 600 was down 0.37 point or 0.09% today to 407.87, the German DAX was up 61.98 points or 0.49% to 12803.24, while the French CAC 40 index was down 15.71 points or 0.26% to 6061.59.

UK markets were closed for the funeral of Queen Elizabeth II.

North America

Major US stock indexes perked up on Monday as investors looked ahead to the Federal Reserve's interest-rate decision and fretted about the health of the U.S. economy.

The S&P 500 gained 0.7%, snapping a two-session losing streak. The Dow Jones Industrial Average advanced 0.6%, while the technology-focused Nasdaq Composite rose 0.8%. The indexes opened lower on Monday morning but swung into positive territory as the closing bell approached.

The S&P and Nasdaq last week notched their biggest weekly declines since June amid a slew of corporate warnings that raised alarm bells about the trajectory of the US economy. Companies such as FedEx and General Electric were among those that pointed to signs of economic troubles.

The messages sparked worries among investors about the extent to which corporate earnings can hold up as the Fed keeps raising interest rates and the US economy potentially heads for a recession.

For much of this year, investors have been heartened by largely resilient corporate results, even in the face of decades-high inflation. But sliding earnings estimates lately have forced some investors to reconsider their exposure to stocks.

This week, investors are largely focused on a round of interest-rate decisions by central banks. The Fed's decision will be followed Thursday by the Bank of England.

Futures markets on Monday showed that traders estimate an 82% chance that the Fed will raise interest rates by 0.75 percentage point, and a 18% chance that the US central bank will lift rates by a full percentage point, according to CME Group.

"We're afraid that the Fed could surprise us with another jumbo hike," said Florian Ielpo, head of macro at Lombard Odier Investment Managers. Last week's corporate warnings, he said, suggested "we very well could be at the entry point of the U.S. recession."

Stocks of vaccine makers tumbled Monday after President Biden said in a televised interview that the Covid-19 pandemic was over. Moderna dropped 7%. Novavax fell 6.7%, while Pfizer shed 1.3%.

Later this week, investors will parse results from companies including Costco Wholesale and home builder Lennar. They also will get full earnings results from FedEx on Thursday after its sales warning last week.

Some traders have grown accustomed this year to rebounds after bouts of selling. Last week marked the eighth time this year that the S&P 500 has lost at least 3% on a weekly basis.

During the previous seven occasions, the benchmark index finished the following week higher four times, with an average gain of 4.4%, analysts at JPMorgan Chase said in a note Monday, adding that any rally would likely be concentrated in megacap tech stocks, among others.