Australia

Australian shares are set to rise this morning following a strong day for US stocks. Although both Europe and the US reported weaker-than-expected manufacturing data, stock indices climbed on hopes that high interest rates may finally be having their desired effect on global economies.

ASX futures were 18 points or 0.3% higher as of 6:00am on Thursday, suggesting a climb at the open.

Technology and real-estate shares lifted the S&P 500 to its best daily performance since June despite surveys of purchasing managers that flashed warnings of economic slowdown on both sides of the Atlantic.

The S&P 500 rose 1.1%. Energy shares were the only segment of the broader index that ended the day down, drifting lower along with prices for oil and gas futures.

The Dow Jones Industrial Average added 0.5% or about 184 points. The Nasdaq Composite, which is loaded with tech stocks, gained 1.6% and is now up 31% this year thanks to investor excitement over artificial intelligence and chip makers powering the latest computing boom. Canadian shares also performed strongly, with the S&P/TSX Composite rising 0.9%.

In commodity markets, Brent crude oil lost 1.4% to US$82.83 a barrel while gold added 1.0% to US$1,916.39.

Australian government bonds were lower, with the 2 Year yield dipping to 3.88% and the 10 Year yield tripping to 4.19%. US Treasury notes increased, with the 2 Year yield rising to 4.96% and the 10 Year yield climbing to 4.19%.

The Australian dollar leaned higher to 64.71 US cents from its previous close of 64.20. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 97.97.

Asia

Chinese shares ended lower, extending a recent sell-off after a short technical rebound on Tuesday. Mounting signs that the Chinese economy is cooling and slipping toward deflation weighed on sentiment while traders awaited policy action from Beijing. Hardware makers and software companies led the losses. Foxconn Industrial Internet declined 4.9% and Beijing Kingsoft Office Software dropped 2.3% after it posted 1H earnings Tuesday. Financials and property developers also weighed on the market. CSC Financial retreated 2.8% and China Vanke declined 1.4%. The benchmark Shanghai Composite Index ended 1.3% lower at 3078.47. The Shenzhen Composite Index dropped 2.0% and the tech-heavy ChiNext Price Index was 2.3% lower.

Hong Kong shares closed higher, recovering from morning losses. Investors were looking toward upcoming bank earnings, which kicked off later in the session, with China Construction Bank set to report after market close. Lenders' earnings were also in focus after Beijing trimmed benchmark interest rates modestly on Monday to protect banks' net interest margins. Consumer-goods and technology stocks led the gains. Retailer Anta Sports rose 9.7% in the wake of 1H earnings. Tech company Baidu added 4.4% and consumer-electronics maker Xiaomi gained 2.3%. Among the losers were property developer Country Garden Holdings, which fell 6.7%, and Xinyi Solar, which lost 3.1%. The benchmark Hang Seng Index rose 0.3% to 17845.92. The Hang Seng Tech Index gained 0.2%.

The Nikkei Stock Average closed 0.5% higher at 32010.26 as utilities and steel shares led the gains, helping offset some losses among energy companies and trading houses. Kansai Electric Power gained 4.0% and Kobe Steel rose 2.2%, while Mitsubishi Corp. fell 1.1% and Inpex lost 0.3%. Among individual movers, Kintetsu Department Store climbed 8.2% after it raised its fiscal-year earnings guidance. Investors were focused on economic data, including US new-home sales due later in the day, ahead of the Jackson Hole symposium later this week.

India's benchmark Sensex index rose 0.3% to close at 65433.30 amid recovering risk appetite, spurred by decent gains in US stock-index futures. HSBC remains constructive on India's equity market, which it thinks is going through a bullish phase, the bank's equity strategists said in a research report. Indian companies' 1Q results, on average, still point to a strong earnings growth outlook for FY 2024 that should stand out amid the global slowdown narrative, they added. The best performers on the Sensex included State Bank of India and ICICI Bank, which rose 1.5% each, and Larsen & Toubro, which was 1.4% higher.

Europe

European stocks rose as investors stayed positive despite downbeat economic data ahead of the Jackson Hole economic symposium later this week. The pan-European Stoxx Europe 600 gained 0.4%, the French CAC 40 edged 0.1% higher and the German DAX climbed 0.2%. Property stocks were among the continent’s biggest risers.

"It's been another day of disappointing economic data with French, German and UK flash manufacturing and services PMIs coming in well below expectations," CMC Markets analyst Michael Hewson commented. "Rather perversely, this hasn't been taken as the negative it might have been as it serves to prove rate hikes by central banks are starting to have the desired effect."

The United Kingdom’s FTSE 100 closed 0.7% higher at 7,320.53 points as weak provisional UK purchasing managers' data suggested interest rates are having the desired effect. "The sharp slide in UK PMIs has given the UK real estate and housing sector a lift, as Bank of England peak rate expectations get revised lower," Michael Hewson wrote, pointing to the rise in Segro and Land Securities shares as well as modest gains for Taylor Wimpey and Barratt Developments. Miners Fresnillo, Anglo American and Endeavour Mining, pulled up by rising metal prices, also finished the session among the top performers on the blue-chip British index.

North America

Technology and real-estate shares lifted the S&P 500 to its best daily performance since June despite surveys of purchasing managers that flashed warnings of economic slowdown on both sides of the Atlantic.

The S&P 500 rose 1.1%. Energy shares were the only segment of the broader index that ended the day down, drifting lower along with prices for oil and gas futures.

The Dow Jones Industrial Average added 0.5% or about 184 points. The Nasdaq Composite, which is loaded with tech stocks, gained 1.6% and is now up 31% this year thanks to investor excitement over artificial intelligence and chip makers powering the latest computing boom. Canadian shares also performed strongly, with the S&P/TSX Composite rising 0.9%.

Shares of retailers and consumer focused firms that reported quarterly results Wednesday were widely divergent. Foot Locker shares dropped 28%, while Abercrombie & Fitch popped 24%. Williams-Sonoma added 13% and Kohl's, Advance Auto Parts and Bath & Body Works each climbed at least 3% on their own results.

Stationary-bike maker Peloton Interactive, a pandemic lockdown favorite, shed 23% to close at a record low after warning investors to expect more losses ahead.

Toll Brothers' results walloped Wall Street's expectations and showed that home-building remains a point of strength in the economy, despite the climb in mortgage rates. The Mortgage Bankers Association said the rate on 30 Year fixed homes climbed to 7.3%, the highest in more than 20 years.

Nvidia, the first semiconductor firm to achieve a trillion-dollar stock market value, gained 3.2% Wednesday before reporting its highly anticipated second-quarter earnings.

Nvidia and other big tech firms have propelled 2023's surprising rally in stocks, defying higher interest rates. The rates have threatened corporate earnings and boosted the returns on cash and government bonds to the highest levels relative to inflation in more than a decade.

Robert Minter, director of ETF Investment Strategy at asset manager Abrdn, said investors are moving money into sure things, like cash and short-term US debt, but are hesitant to be completely sidelined should stocks keep climbing.

"What we're hearing from people is they're taking a little off the table and putting it into cash, but they understand the danger of putting too much of their assets in cash," he said.

Ben Kirby, co-head of investments at Thornburg Investment Management, said he's recommending clients buy longer-term bonds to lock in today's attractive yields and accumulate dividend-paying stocks, which have lagged behind the market this year and are a relative bargain compared with tech stocks.

"If you're going to buy a money-market account that pays 5%, that probably looks great for a while, but if we do go into recession then what can happen is that rate will come down and you'll have to reinvest at a lower rate," he said.

The 10 Year US Treasury yield declined to 4.197% on Wednesday, down the second straight day after hitting 4.339% on Monday, which was the highest closing level since 2007. Yields also declined on 30 Year bonds and one-year bills.

Investors bid up government bonds after a purchasing managers' survey showed US business activity rising at a weaker pace than expected. European bonds also rallied after PMI surveys showed business activity there contracting more than expected.

Jennifer McKeown, chief global economist at Capital Economics, said the surveys imply that the US economy is barely growing and that the eurozone and the United Kingdom are near recession.

"With output prices still easing gradually, the surveys strongly suggest that we are at or close to the peak in monetary tightening cycles," she said.

Investors will be listening for hints about the path of interest rates on Friday when Federal Reserve Chair Jerome Powell speaks at the Jackson Hole Economic Symposium in Wyoming.