Australia

Australian shares are set to edge higher after a mixed session on Wall Street. Investors were cautious after Fed Chairman Jerome Powell said the central bank was keeping its options open about future rate increases.

ASX futures were up 24 points or 0.3% at 7302 as of 8:00am on Thursday, pointing to a gain at the open.

US stocks were mixed on Wednesday as investors parsed a second day of congressional testimony from Federal Reserve Chair Jerome Powell and considered another signal of a hot labor market. The S&P 500 was up around 0.1%, the Dow Jones Industrial slipped 0.2%. The Nasdaq Composite was up 0.5%.

"There's this growing concern about a 'no landing' scenario, effectively where it turns out that the Fed and other central banks have just not done anywhere near enough" to temper economic growth and curb inflation, said John Roe, head of multiasset funds at Legal & General Investment Management.

In his second session of testimony to Congress, Mr. Powell said Wednesday the central bank was keeping its options open about future rate increases and that coming economic data would strongly influence the rate decision at the Fed's March 21-22 meeting.

In commodity markets, Brent crude oil slipped 1.04% to $US82.42 a barrel, gold was flat at US$1,815.14

In local bond markets, the yield on Australian 2 Year government bonds rose to 3.46% while the 10 Year rose to 3.74%. Overseas, the yield on 2 Year US Treasury notes rose to 5.06% and the yield on the 10 Year US Treasury notes was up at 3.97 %.

The Australian dollar hit 65.81 US cents down from the previous close of 65.83. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies was flat at 98.64.

Asia

Chinese shares are lower in early trade, following declines on Wall Street after Fed Chair Powell said that the US central bank was prepared to speed up rate increases to combat inflation and cool down the economy. Investors are also cautious after Beijing unveiled a plan to restructure the bureaucracy. The benchmark Shanghai Composite Index is down 0.4% at 3271.88, while the Shenzhen Composite Index and ChiNext Price Index are each 0.3% lower.

Hong Kong stocks ended the day lower, tracking broad weakness in Asian equities. The benchmark Hang Seng Index lost 2.35% to settle at 20051.25. Chinese property developers led losses, as the sector retreated from a recent rally fueled by policy support measures and sales recovery hopes. Country Garden dropped 5.3% and Longfor lost 4.6%. Exporters further weighed on the market, as higher interest rates could cloud demand from these companies' US and European clients. Shenzhou International fell 4.4% and Techtronic Industries was down 3.3%

Japanese shares ended higher, led by gains in electronics stocks, as the yen weakened to the lowest level in nearly three months against the dollar due to the prospects of the Fed's further tightening. Olympus Corp. gained 2.1% and Omron climbed 1.6%. The Nikkei Stock Average rose 0.5% to 28444.19.

Europe

European stocks were mostly higher in closing trade as Federal Reserve Chair Jerome Powell delivered the second day of his semi-annual testimony before Congress. The pan-European Stoxx Europe 600 rose 0.1%, the British FTSE 100 climbed 0.1%, the German DAX gained 0.5% but the French CAC 40 fell 0.2%.

In Wednesday's testimony, Powell stressed that the next policy decision on March 22 will be data-dependent after he fuelled speculation of a larger 50 basis point interest rate rise in Tuesday's testimony.

"The comments appear to have helped push markets to their highs of the day, bringing about a modest rebound into the close, however, markets still appear very much rangebound, with no clear direction, with the DAX outperforming," CMC Markets analyst Michael Hewson wrote.

North America

US stocks were mixed on Wednesday as investors parsed a second day of congressional testimony from Federal Reserve Chair Jerome Powell and considered another signal of a hot labor market. The S&P 500 was up around 0.1%, the Dow Jones Industrial slipped 0.2%. The Nasdaq Composite was up 0.5%.

"There's this growing concern about a 'no landing' scenario, effectively where it turns out that the Fed and other central banks have just not done anywhere near enough" to temper economic growth and curb inflation, said John Roe, head of multiasset funds at Legal & General Investment Management.

In his second session of testimony to Congress, Mr. Powell said Wednesday the central bank was keeping its options open about future rate increases and that coming economic data would strongly influence the rate decision at the Fed's March 21-22 meeting. The global economy has shown signs of resilience in recent weeks.

The US private sector added 242,000 jobs in February, according to the ADP employment report. That came in above economists' forecasts, another sign of an unexpectedly strong labor market. A second readout, the JOLTS report on job openings, also came in higher than expected despite elevated layoffs in the technology sector.

The most important near-term indicator for gauging the health of the jobs market will be Friday's nonfarm payrolls report. "We're in an environment where every data point can cause volatility," said Karim Chedid, an investment strategist at BlackRock.

Bond-market moves in recent weeks have meant that the inversion of the yield curve -- in which shorter-dated bonds yield more than longer-dated ones -- deepened. Such inversions are often viewed as an indicator of a possible recession.

On Tuesday, two-year yields exceeded 10-year yields by more than a percentage point for the first time since 1981. The move also indicated that investors believe that interest rates will rise higher than previously expected over the coming months.

"I think we will probably see half-point rate hikes and the market is already prepared for that," said Christian Hoffmann, portfolio manager at Thornburg Investment Management, which manages $42 billion in client assets.

Some investors are turning to cash and short-term Treasurys to search for income. Brian Vendig, president of MJP Wealth Advisors, which manages about $1 billion in assets, said he has been adding to prime money market funds, short-term Treasurys and certificates of deposit for clients.

"If you can hide in cash and get competitive yields because you are looking for principal protection or you know of an expenditure that's coming over the next 12 months, it makes sense to do that in this environment," said Mr. Vendig.

Among individual stocks, CrowdStrike rose 1.7% after the cybersecurity company gave a revenue outlook that came well above analysts' forecasts. Online clothing and styling company Stitch Fix dropped 4.1% after it said losses more than doubled last quarter. Campbell Soup gained 1.6% after the soup and snack maker reported a 12% rise in sales.