Australia

Australian shares are set to drag today after inflation concerns weighed on global markets Wednesday. US indices closed lower as investors interpreted minutes from the Federal Reserve’s July meeting. Meanwhile, UK inflation data also sent British stocks tumbling, since their core annual CPI was unchanged in July from the month prior.

ASX futures were 22 points or 0.3% lower as of 6:00am on Thursday, suggesting a negative open.

US stocks dipped and government bond yields reached a 15-year high after minutes from the most recent Federal Reserve policy meeting showed central bankers are worried about a possible resurgence in inflation.

The S&P 500 fell 0.8%, the Dow Jones Industrial Average dropped about 181 points, or 0.5% and the Nasdaq Composite fell 1.1%. All three indices are down 2.2% or more, so far in August. Meanwhile, the S&P/TSX Composite, Canada’s benchmark index, closed flat.

Recent economic data has provided investors with proof of a still-strong economy, raising concerns that the Fed's campaign to raise interest rates may not yet be over.

In commodity markets, Brent crude oil gave up 1.9% to US$83.24 a barrel while gold closed 0.5% lower to US$1,892.61.

Australian government bonds were lower, with the 2 Year yield falling to 3.94% and the 10 Year yield declining to 4.21%. Meanwhile, yields on US Treasury notes increased, with the 2 Year yield rising to 4.98% and the 10 Year yield climbing to 4.27%.

The Australian dollar dropped to 64.22 US cents from its previous close of 64.52. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, increased to 98.30.

Asia

Chinese shares ended lower as the market's mood continued to be weighed by the cooling economic recovery. Investment banks including JPMorgan and Barclays cut their China GDP forecast on Tuesday after the release of disappointing economic indicators. Software makers and telecoms led the session's losses. Beijing Kingsoft Office Software declined 7.5% and China Mobile fell 3.1%. However, property shares gained amid chatter over the likely easing of purchasing curbs to check the sector's downward spiral. China Vanke rose 1.75% and Poly Developments & Holdings Group added 1.9%. The benchmark Shanghai Composite Index dropped 0.8% to 3150.13. The Shenzhen Composite Index declined 0.95% and the tech-heavy ChiNext Price Index lost 0.7%.

Hong Kong shares ended lower, mirroring China’s downbeat mood. Hong Kong-listed automakers were lower after Tesla lowered prices for its existing inventories for its Model S and Model X cars in China, which intensified the price war. NIO Inc. dropped 5.5% and XPeng declined 3.55%. However, property shares gained. Longfor Group Holding rose 3.7% and Country Garden added 3.15%. The benchmark Hang Seng Index dropped 1.4% to 18329.30.

Japanese stocks ended lower, dragged by falls in trading houses and banks as concerns about higher borrowing costs cast a shadow over the economic outlook. Mitsui & Co. lost 3.8% and Mitsubishi UFJ Financial Group dropped 2.9%. The benchmark Nikkei Stock Average fell 1.5% to 31766.82. Investors were focusing on US housing starts and industrial production data, as well as the Federal Reserve's July policy meeting minutes due later in the day.

Indian stocks ended higher, recovering from morning losses to outperform other Asian markets, as investors digested higher-than-expected July inflation data. Retail prices surged 7.4% for the month, compared to 4.9% in June. The benchmark Sensex index climbed 0.2% to 65539.42. Gains in IT shares offset losses in financial stocks. Infosys rose 1.8% and Tech Mahindra was up 0.6%, while Axis Bank dropped 0.7% and Bajaj Finserv lost 0.9%. UltraTech Cement and NTPC led gains on the index, rising 2.4% and 2.1%, respectively. Tata Steel was the index's worst performer, dropping 1.9%.

Europe

European stocks traded mixed following a mostly downbeat session in Asia. The pan-European Stoxx Europe 600 and the French CAC 40 dropped 0.1%, while the German DAX gained the same amount.

UK headline inflation for July eased compared to June, but core inflation stayed the same and services inflation increased. "Whilst the latest headline inflation numbers have finally followed the Bank of England's repeatedly rewritten script, the BOE will have little cause for celebration," AJ Bell analyst Danni Hewson wrote, adding that falling energy prices were mainly responsible for the lower headline rate.

The United Kingdom’s FTSE 100 Index closed 0.4% lower to 7356 points, its fourth consecutive day in red territory, dragged by real estate stocks and the basic resources sector. Investors were weighing the possibility of interest rates staying higher for longer after core CPI remained unchanged in July, CMC Markets analyst Michael Hewson said in a note. "Banks are also starting to lose the benefit accorded to them from rising rates, as higher rates for longer threatens to squeeze their margins and increase the pressure to pay savers more," he added.

NatWest was the worst performer on the British index, with shares closing down 3.1%, followed by property search website Rightmove and Fresnillo, down 2.6% and 2.4%, respectively. Admiral shares outperformed the index, closing up 7.2%, after reporting 1H earnings.

North America

US stocks dipped and government bond yields reached a 15-year high after minutes from the most recent Federal Reserve policy meeting showed central bankers are worried about a possible resurgence in inflation.

The S&P 500 fell 0.8%, the Dow Jones Industrial Average dropped about 181 points, or 0.5% and the Nasdaq Composite fell 1.1%. All three indices are down 2.2% or more, so far in August. Meanwhile, the S&P/TSX Composite, Canada’s benchmark index, closed flat.

Recent economic data has provided investors with proof of a still-strong economy, raising concerns that the Fed's campaign to raise interest rates may not yet be over.

The Atlanta Fed on Wednesday revised its inflation-adjusted gross-domestic-product growth forecast to 5.8% for the third quarter, according to its GDPNow model. That forecast was 5% on Tuesday. Retail sales rose more than expected in July, the Commerce Department said Tuesday.

Rising bond yields, coupled with high stock valuations, mean the potential rewards from owning stocks are currently unappealing, said Tony Roth, chief investment officer at Wilmington Trust.

"We think economic growth is pretty robust and expect a soft landing," he said. "But having said that, multiples are high and we have to evaluate the attractiveness of stocks relative to bonds."

The S&P 500 is up 15% this year, despite the August selloff. Some investors say it would be premature to think the rally in stocks is finished altogether.

"It's too early to expect a meaningful shift in market tenor until we see a definitive break in the economic environment," such as rising unemployment or falling corporate earnings, said Lauren Goodwin, economist and director of portfolio strategy at New York Life Investments.

Progressive, the day's top performer in the S&P 500, rose 8.9% after the insurer reported stronger-than-expected July results.

Target shares rose 3% after the retail giant reported earnings that were ahead of Wall Street expectations. TJX stock rose 4.1% to a record high after the retailer reported results. Walmart is slated to report its quarterly earnings on Thursday.

Shares of electric-vehicle maker VinFast Auto fell 19%. The stock more than tripled in its market debut Tuesday, leaving it with a market value on par with some of the world's leading automakers.