Australia

Australian shares set to slip at open, as Wall Street losses continue.

ASX futures were 19 points or 0.25% lower at 7480 as of 8:00am AEDT on Wednesday.

US stocks remained lower on Wednesday after minutes from the Federal Reserve's December meeting showed that policymakers had a high level of uncertainty around their interest-rate projections and did not rule out further rate hikes.

The S&P 500 SPX dipped 38 points, or 0.8%, to 4,7051. The Dow slipped by 0.7% to a close at 37,430. The Nasdaq Composite COMP eased 174 points, or 1%, to 14,592.

In commodity markets, Brent crude oil rose 3.45% to $US78.51 a barrel, Gold fell 0.90% to $US2,040.51 and Iron ore gained 0.6% to $US142.55 a tonne.

In local bond markets, yields on Australian 2 Year government bonds was up at 3.81% and the 10 Year yield was mostly flat at 4.04%. Overseas, the US Treasury notes werelargely flat, with the yield on 2 Year unchanged at 4.33% and the 10 Year yield at 3.14%.

The Australian dollar was slightly lower at 67.26 US cents from its previous close of 67.58. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies was up at 96.79.

Asia

Chinese shares closed mixed as the benchmark Shanghai Composite Index gained 0.2% to 2967.25, the Shenzhen Composite Index lost 0.6% and the ChiNext Price Index fall 1.2%. Chinese companies will likely focus on expanding their overseas market this year, especially the new energy industry chain companies, said Dan Wang, chief economist at Hang Seng Bank. "The oversea market competition is likely to be even more competitive than domestic market." Auto parts and semiconductor sectors led the session's losses as Ningbo Tuopu declined 1.25% and Ningbo Shenglong Automotive Powertrain System lost 9.9%. Will Semiconductor fell 3.95% and Semiconductor Manufacturing International Corp. was down 0.9%. Meanwhile, coal stocks gained as Yankuang Energy Group rose 3.0% and China Shenhua Energy added 1.85%.

Hong Kong shares closed lower, dragged by tech and property stocks. The local market is waiting for China's 15th five-year plan for economic and social development, which the government will start preparing this year, Hang Seng Bank chief economist Dan Wang said. "The main theme will be changing from an investment-driven to a high-tech driven economy," she said. Select tech stocks led losses, with JD Health International down 5.9% and Alibaba Health Information Technology falling 4.1%. Developers Hang Lung Properties and Longfor Group lost 2.95% and 2.6%, respectively. Wharf Holdings dropped 6.0%, marking its largest daily percentage drop in over a year. China Resources Beer led gains, rising 3.0%. The benchmark Hang Seng Index shed 0.85% to 16646.41 and the Hang Seng Tech Index lost 1.8%.

Nikkei futures were 320 points lower at 33095 on the SGX. The yen's mild strength, which hurts overseas earnings of Japanese exporters when repatriated to Japan, may be weighing on Nikkei futures. The Nikkei Stock Average closed 0.2% lower at 33464.17 on Friday, marking a 28% increase for 2023 and making it Asia-Pacific's top performer. Japanese equities markets are closed Tuesday and Wednesday.

Indian shares ended lower, tracking losses across regional markets, with steel and information technology stocks leading losses. JSW Steel fell 3.8% and Tata Steel was 3.05% lower. Infosys shed 2.9% and Wipro declined 2.8%. Tech Mahindra lost 2.6%. India's IT services sector will likely bottom out in 2024, BNP Paribas India analyst Kumar Rakesh said in a research note. The improving macro economy and increasing large deal wins could drive Indian IT companies' revenue growth, the analyst added. Bank stocks helped support the market. IndusInd Bank gained 1.7% and Axis Bank was 0.65% higher. The benchmark Sensex ended 0.75% lower at 71356.60.

Europe

European stocks dropped as geopolitical tensions continue to dampen the market mood. The Stoxx Europe 600 and FTSE 100 fell 0.9% and 0.5% respectively, the DAX retreated 1.5% and the CAC 40 backtracked 1.7%, with losses for industrial and tech stocks outweighing gains for telecoms and insurers. Oil shares traded mixed as Brent crude rose 2.8% to $78 a barrel after a bomb blast in Iran and a shutdown of Libya's largest oil field.

The FTSE 100 index closed Wednesday down 0.5% to 7682 points, mainly dragged by the mining sector and amid a downturn in global markets as repriced rate-cut expectations and increased tensions in the Middle East led to further risk-off sentiment, IG senior market analyst Axel Rudolph said in a note. "Lower-than-expected U.S. job openings, while the manufacturing sector remains in contraction territory, also weigh on stock indices ahead of this evening's Federal Open Market Committee minutes," he said. Miner Anglo American led the fallers with shares closing down 5.0%, followed by Rentokil and Pershing Square Holdings, down 4.95% and 4.0%, respectively. On the green side, Centrica was the top riser, with shares up 3.15%, followed by pharma giant GSK, up 2.7% after Jefferies upgraded its rating on the stock to buy.

North America

US stocks remained lower on Wednesday after minutes from the Federal Reserve's December meeting showed that policymakers had a high level of uncertainty around their interest-rate projections and did not rule out further rate hikes.

The S&P 500 SPX dipped 38 points, or 0.8%, to 4,7051. The Dow slipped by 0.7% to a close at 37,430. The Nasdaq Composite COMP eased 174 points, or 1%, to 14,592.

Federal Reserve officials anticipated discussing the process for first slowing then stopping the process of shrinking the central bank's bond holdings at their December meeting. They agreed to begin that conversation "well before such a decision was reached in order to provide appropriate advance notice to the public," according to minutes of the meeting. Fed officials ramped up asset purchases at the start of the pandemic as part of their effort to hold down interest rates. They started letting those assets run off the balance sheet in 2022.

US investment-grade bond issuers are expected to record a modest pace of net credit-rating upgrades in the first quarter of 2024, following net downgrades in December, say Bank of America credit strategists in a note. The downgrades in December were mainly concentrated in just two issuers, Pfizer and Bristol-Myers Squibb, BofA says. "The net downgrade in December was likely a one-off, and rating actions for IG issuers should turn moderately positive in 1Q," the strategists say. "The share of IG index bonds on a positive outlook or watch was 1.7% at the end of December, above the 1.5% median since 2010," they say.

The dollar could rise over the next one to three months as the market reassesses significant expectations for U.S. interest-rate cuts this year, says Rabobank senior currency analyst Jane Foley in a note. In December, the Fed signaled around three 25 basis-point rate cuts for 2024, but the market is currently looking for about twice that, she says. "With so many Fed rate cuts currently in the price, we envisage that the dollar could strengthen on a 1-to-3-month view vs a basket of currencies." The dollar should end the year softer, however, due to rate cuts and improved risk appetite, Foley says. The DXY dollar index rose 0.3% to a two-week high of 102.6020.

Treasury yields rose, with the 10-year on path for a fourth consecutive daily gain. "The backup in yields is likely to continue as the market adjustment from overbought market condition," Spartan's Peter Cardillo says in a note. He expects demand for Treasurys to resume once the 10-year yield reaches 4.05%. Fed-funds futures, however, are still betting on a fast pace of interest rate cuts starting in March.