Australia

Australian shares are set to edge lower following a dip on Wall Street after global central banks raise rates to fight inflation.

ASX futures were down 15 points or 0.2% at 6630 as of 7:00am on Friday, pointing to a slip at the open.

US stocks dropped after the latest interest-rate increases from the Federal Reserve and other central banks, which have added to fears that the battle to control rising prices could bring a recession.

The S&P 500 lost about 0.8%, extending losses from Wednesday when it closed down 1.7%. The tech-heavy Nasdaq Composite declined 1.4% and the Dow Jones Industrial Average was down 0.4%.

The Fed raised rates by another 0.75 percentage point on Wednesday and signaled that there are more hikes to come. Fed Chairman Jerome Powell said in a press conference that there isn't a painless way to tame inflation.

In particular, his message about the diminishing odds of a soft landing for the economy may have further spooked investors, said Eric Souza, senior portfolio manager at SVB Asset Management. "That was a really telling moment that markets looked at: Is this his hint that we're heading into a recession?"Souza said.

In commodity markets Brent crude oil rose 0.49% to $US90.27 a barrel, gold edged down 0.15% to US$1,671.46.

In local bond markets, the yield on Australian 2 Year government bonds were at 3.10% while the 10 Year was at 3.66%. Overseas, the yield on 2 Year US Treasury notes rose to 4.11% and the yield on the 10 Year US Treasury notes was up at 3.71%.

The Australian dollar hit 66.49 US cents up from the previous close of 66.30. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 102.59

Asia

China stocks ended the session lower amid a broad equities downturn in Asia after the Fed raised rates to multi-year highs and indicated further increases by year's end. The benchmark Shanghai Composite Index edged down 0.3% to settle at 3108.91, while the Shenzhen Composite Index fell 0.6% to 1991.85. The tech-heavy ChiNext Price Index was 0.5% lower at 2319.42. A wide range of sectors weakened, with tourism agencies and consumer goods makers leading the decline. Tourist-attraction operator Emei Shan Tourism fell 3.8% while beer maker Guangzhou Zhujiang Brewery was down by 3.1%

Hong Kong's Hang Seng Index closed at its lowest level since late 2011, as the Fed's rising hawkishness sparked a broad selloff in regional equities. The benchmark index fell below 18000 during the session, before recovering some lost ground to close 1.6% lower at 18147.95. Tech and financials were among top laggards. HSBC Holdings lost 3.6% and AIA Group declined 2.4%, while JD.com slid 2.8% and Alibaba Group was 2.6% lower. GOGOX retreated 8.9% after a disclosure that Alibaba has sold shares in the logistics company. Only a handful of blue chips were spared from the market downturn, including Chow Tai Fook Jewellery, which has ended higher in four of the past five sessions.

Japanese stocks ended lower, dragged by falls in tech and shipping stocks, as the Fed's rate increase raised concerns about the global economic outlook. Recruit Holdings dropped 2.5% and Nippon Yusen shed 1.2%. The Nikkei Stock Average fell 0.6% to 27153.83. The 10-year Japanese government bond yield dropped 2 basis points to 0.230%

Europe

European stocks fell in closing trade as investors react to interest rate rises by several central banks. The pan-European Stoxx Europe 600 dropped 1.8%, the German DAX slipped 1.8% and the French CAC 40 shed 1.9%.

"The battle against inflation was taken up a notch further today as we saw the Swiss National Bank, Bank of England, and the Norges Bank, follow the Federal Reserve's lead last night, and raise interest rates, while we also saw intervention from the Bank of Japan in defense of the Japanese yen," CMC Markets analyst Michael Hewson wrote. The Fed and SNB lifted rates by 75 basis points while the Norges Bank and BOE raised rates 50bp.

In London, the FTSE 100 closed down 1.1% after interest-rate hikes from both the Bank of England and the Federal Reserve.

"The FTSE 100 has struggled despite resilience in basic resources and energy, on the back of firmer commodity prices, notably copper as well as oil and gas, with gains for Rio Tinto, Glencore, and BP amongst others. That's been as good as it gets on the positive side with weakness almost everywhere else," CMC Markets UK's chief market analyst Michael Hewson said.

On a day punctuated by red, JD Sports led the fallers, down 8.4%, followed by Ashtead Group, down 7.3%, and Intermediate Capital, which ended 7.1% down

North America

US stocks dropped after the latest interest-rate increases from the Federal Reserve and other central banks, which have added to fears that the battle to control rising prices could bring a recession.

The S&P 500 lost about 0.8%, extending losses from Wednesday when it closed down 1.7%. The tech-heavy Nasdaq Composite declined 1.4% and the Dow Jones Industrial Average was down 0.4%.

Stocks have been weighed down by persistently high inflation and central banks' moves to tighten financial conditions in response. The Fed raised rates by another 0.75 percentage point on Wednesday and signaled that there are more hikes to come. Fed Chairman Jerome Powell said in a press conference that there isn't a painless way to tame inflation.

In particular, his message about the diminishing odds of a soft landing for the economy may have further spooked investors, said Eric Souza, senior portfolio manager at SVB Asset Management. "That was a really telling moment that markets looked at: Is this his hint that we're heading into a recession?" Mr. Souza said.

As fears of an economic slowdown mount, many of SVB's investing clients -- mainly Silicon Valley tech companies -- have been choosing to hold extra cash in reserve or to prepare for acquisition opportunities, Mr. Souza added.

FedEx shares rose 0.8% after the company posted a quarterly profit and said it will take steps to save $2.2 billion to $2.7 billion in its 2023 fiscal year. Last week, FedEx shares were pummeled after it warned of falling package volumes, a report that rippled through markets as another omen of recession.

Energy stocks gained, lifted by a rise in oil prices amid renewed anxiety about the course of Russia's invasion of Ukraine. Brent crude futures rose 0.7% to $90.46 a barrel. That helped support stocks such as Valero Energy, which was up about 2%, and oil-field-services provider Schlumberger, which gained 1.7%.

Airlines suffered. American Airlines, United Airlines, Delta Air Lines and Alaska Air each shed between 3% and 5%.

The S&P 500's consumer-discretionary sector lost 2.2% as investors worried about how well demand from shoppers might hold up during a recession. Rising interest rates and the potential economic fallout have made it difficult to feel comfortable investing in risk assets, from stocks to high-yield bonds, said Justin Gmelich, global head of markets at King Street, an asset manager.

"As rates move higher, that means lower multiples for the equity market, and you're also going to see a bit of earnings contraction," Mr. Gmelich said. King Street's credit investments have been defensive amid concerns that current bond prices may not fully reflect the risk of a downturn, he said.

A long list of central banks made monetary-policy decisions on Thursday, including the Bank of England, which raised interest rates. The Swiss National Bank also lifted its key policy rate, moving it up to 0.5%, making it the last European central bank to exit negative rates.
The Bank of Japan -- a holdout in sticking with ultralow interest rates -- kept its policy unchanged, sending the yen to the lowest level against the dollar since 1995. The currency then reversed losses after the Japanese finance ministry said it intervened in the foreign-exchange market to support the yen for the first time in 24 years.