Australia

Australian shares are set to open higher, after the Dow Jones Industrial Average jumped to a fresh high as tech stocks lagged.

ASX futures were up 0.68% or 55 points as of 8:00am on Wednesday, suggesting a higher open.

Major U.S. stocks indexes notched new highs Tuesday, while small-cap stocks extended their outperformance over megacap technology shares.

The S&P 500 rose 0.6%, clinching its 38th record close of the year. The Dow Jones Industrial Average advanced 743 points, or 1.8%, also securing an all-time high. That marked the blue-chip index's biggest one-day percentage gain since June 2023. The Nasdaq Composite edged 0.2% higher.

In commodity markets, Brent crude oil was down 1.2% to US$83.85 a barrel, while gold was down 0.1% at US$2,467.24.

The Australian dollar was unchanged at 67.32 US cents.

Asia

Chinese shares closed higher, supported by semiconductor and software stocks. The benchmark Shanghai Composite Index rose 0.1% to 2,976.30, the Shenzhen Composite Index was 0.5% higher and the ChiNext Price Index added 1.4%. Investors are awaiting the official readout of the Third Plenum meeting in anticipation of more policy easing after a slew of disappointing economic data on Monday. Semiconductor Manufacturing International Corp. rose 0.5% and Naura Technology Group was 3.8% higher. Beijing Kingsoft Office Software put up 4.1% and iFlytek advanced 2.3%. Insurance stocks weighed on the market, with Ping An Insurance down 3.15% after it proposed to raise $3.50 billion via convertible bonds.

Hong Kong shares ended lower, dragged down by insurance stocks and as soft economic data out of China weighed on sentiment. The Hang Seng Index fell 1.6% to 17,727.98 and the Hang Seng Tech Index finished 1.35% lower. Among major stocks, Ping An Insurance shares dropped 5.4% after the insurance giant said it would raise $3.5 billion by issuing convertible bonds. Fellow insurer AIA Group dropped 3.25%, while online travel agency Trip.com fell 3.8%. Gainers included Sunny Optical Technology, which was 7.0% higher, and Xinyi Solar, which added 1.9%.

Japanese stocks end higher, led by gains in defense and financial stocks, as expectations for a second Trump presidency grow following an assassination attempt. Mitsubishi Heavy Industries gains 5.0% and Nomura Holdings climbs 3.7%. The Nikkei Stock Average rises 0.2% to 41,275.08. Investors are focusing on economic data and their policy implications. The 10-year Japanese government bond yield falls 2.5 bps to 1.020%.

Indian shares edged higher, as gains in the tech sector offset weakness in power stocks. Tech Mahindra and Infosys each rose 1.1%, while NTPC shed 1.35% and Power Grid Corp. of India fell 0.4%. Bajaj Auto added 0.2% after reporting higher 1Q net profit. Hindustan Unilever was the index's best performer, climbing 2.7% after its plan to sell its water-purification business. The benchmark Sensex ended 0.1% higher at 80,716.55.

Europe

Stocks in the U.K. slipped Tuesday, as the FTSE 100 Index fell 0.2% to 8164.90.

Among large companies, Burberry Group PLC posted the largest decline, dropping 5.3%, followed by shares of Severn Trent PLC, which fell 4.8%. Shares of Pennon Group PLC fell 4.5%.

Wise PLC was the biggest gainer during the session, surging 6.6%, and Ocado Group PLC surged 5.9%. Carnival PLC rounded out the top three movers on Tuesday, as shares gained 4.6%.

In other parts of Europe markets closed lower, with the STOXX Europe 600 Index down 0.3% to 517.30, Germany's DAX slipped 0.4% to 18,518.03 and France's CAC 40 fell 0.7% to 7,580.03.

North America

Major U.S. stocks indexes notched new highs Tuesday, while small-cap stocks extended their outperformance over megacap technology shares.

The S&P 500 rose 0.6%, clinching its 38th record close of the year. The Dow Jones Industrial Average advanced 743 points, or 1.8%, also securing an all-time high. That marked the blue-chip index's biggest one-day percentage gain since June 2023. The Nasdaq Composite edged 0.2% higher.

Stock-market leadership has shifted in recent sessions as investors rotate from shares of AI-focused tech behemoths, which dominated the first half of the year, into the relative laggards, such as industrials and small companies.

The Russell 2000, a benchmark of small-cap stocks, rose 3.5% Tuesday for its fifth consecutive session of gains. The small-cap index has outperformed the Nasdaq Composite by about 11 percentage points over the past five trading days, the largest degree of outperformance since December 2020, according to Dow Jones Market Data.

The Russell 2000 has beaten the S&P 500 by about 10 percentage points over the same period, the widest five-day outperformance on record, based on data going back to 1986.

"While the dominance of tech has made sense, for the rally to extend, we think it is healthy for the rally to broaden," said Sinead Colton Grant, chief investment officer at BNY Wealth.

The move into beaten-down segments of the market reflects increased confidence that the Federal Reserve is on track to potentially begin cutting interest rates in September as inflation cools. Traders are pricing in near-certain odds of a rate cut in September, up from about a 73% probability a week ago, according to CME Group's FedWatch.

Investors are also recalibrating expectations for the 2024 election, after Republican presidential nominee Donald Trump survived an assassination attempt over the weekend. Bets on a Trump election victory have grown, according to PredictIt data. The former president favors policies like tax cuts that some investors believe could encourage spending and boost the economy.

The benchmark 10-year U.S. Treasury yield declined to 4.168% Tuesday from 4.231% Monday, when it climbed in response to increased expectations of a Trump election.

In economic news, June retail-sales data showed American shoppers are remaining resilient. Retail sales were unchanged in June from the prior month, the Commerce Department said, while economists expected a 0.4% decline. Spending in May was also revised higher.

"We're seeing the engine of the U.S. economy continue to be very robust, " Colton Grant said.

A number of strong earnings reports from banks and other bellwether companies also boosted stocks.

Shares of UnitedHealth Group rose 6.5%, boosting the Dow industrials. The company reported stronger-than-expected earnings and revenue, and held its 2024 guidance steady. UnitedHealth suffered a cyberattack in February that weighed on quarterly results.

Bank of America's shares jumped 5.3% after the lender reported quarterly results that beat Wall Street estimates and said its income on lending would improve during the second half of the year.

Shares of Morgan Stanley gained 0.9% after the bank posted a 41% year-over-year increase in profit, boosted by an increase in investment-banking revenue.

Meanwhile, shares of Charles Schwab declined 10% after the brokerage reported a decline in bank deposits and net interest revenue, along with an increase in short-term borrowing.

Overall, analysts are expecting companies in the S&P 500 to report second-quarter earnings growth of more than 9%, according to a FactSet blend of reported results and consensus estimates. That could mark the biggest quarter of year-over-year earnings growth since the end of 2021.

"We could have a backdrop where interest rates are declining from the Fed and corporate profits for the S&P are accelerating," said Bret Kenwell, U.S. investment analyst at eToro. "That's a very good recipe for a bull market."