Australia

Australian shares are set to open lower, after U.S. stocks tumbled amid signs of a cooling economy.

ASX futures were down 1.78% or 144 points as of 8:00am on Friday, suggesting a lower open.

In the US, weakening employment, manufacturing and construction data pushed benchmark 10-year Treasury yields below 4% on Thursday for the first time since February and prompted a broad selloff in stocks and other risky investments.

The Dow Jones Industrial Average fell nearly 500 points. The Nasdaq Composite ended 2.3% lower, erasing most of Wednesday's 2.6% climb, which was the tech-heavy index's best day since February. The S&P 500 underwent its largest intraday swing since November 2022 and ended down 1.4%.

In commodity markets, Brent crude oil was down 1.6% to US$79.52 a barrel, while gold was down 0.1% at US$2,444.39.

The Australian dollar was at 64.98 US cents, down from its previous close of 65.00.

Asia

Chinese shares ended lower, with the Shanghai Composite Index falling 0.2% to 2,932.39. The Shenzhen Composite Index was down 0.5% and the ChiNext Price Index dropped 1.3%. China's finance ministry on Thursday reiterated the message delivered at the July Politburo meeting, without details on further stimulus. Consumers stocks led declines, with Proya Cosmetics dropping 4.65% and Yunnan Botanee Biotechnology falling 2.0%. Gainers included China Yangtze Power, which was 0.9% higher, and SAIC Motor, up 0.3%.

Hong Kong's Hang Seng Index closed 0.2% lower at 17,304.96, weighed by consumer stocks. The markets were likely digesting China's Caixin PMI data, which showed that China's factory activity fell into contraction territory for the first time in nine months in July, signaling that conditions in the manufacturing sector deteriorated, albeit marginally. Among decliners, Zhongsheng Group dropped 6.55%, Li Ning lost 4.5% and Haidilao shed 3.9%. Meanwhile, Power Assets Holdings gained 5.0%, Link REIT rose 3.3% and CLP Holdings added 3.1%. The Hang Seng Tech Index fell 1.15% to 3,476.58.

Japanese stocks ended lower, dragged by falls in real-estate and auto stocks as the yen strengthened following the Bank of Japan's rate increase on Wednesday. Mitsui Fudosan dropped 8.1% and Mitsubishi Estate shed 9.0%. Toyota Motor lost 8.5% after its 1Q net profit rose 1.7% thanks partly to a weak yen. The Nikkei Stock Average fell 2.5% to 38,126.33. Earnings are in focus. The 10-year Japanese government bond yield was down 2.5 basis points at 1.030%.

Indian shares edged higher, with the benchmark Sensex rising 0.15% to close at 81,867.55. Investors are cheering U.S. Fed Chair Jerome Powell's comments overnight that the central bank could cut rates in September. Utility stocks led gains, as Power Grid Corp. of India rose 3.6% and NTPC was 1.75% higher. Decliners included Tata Steel, which was 1.4% lower, and Tata Motors, down 1.0%.

Europe

Stocks in the U.K. fell Thursday, as the FTSE 100 Index declined 1.0% to 8283.36.

Among large companies, Melrose Industries PLC posted the largest decline, dropping 13%, followed by shares of Vesuvius PLC, which dropped 12%. Shares of Schroders PLC dropped 9.7%.

Coats Group PLC was the biggest gainer during the session, surging 13%, and Next PLC surged 8.3%. Oxford Nanopore Technologies PLC rounded out the top three movers on Thursday, as shares surged 7.6%.

In other parts of Europe markets closed lower, with the STOXX Europe 600 Index cown 1.2% to 511.83, Germany's DAX dropped 2.3% to 18,083.05 and France's CAC 40 fell 2.1% to 7,370.45.

North America

Weakening employment, manufacturing and construction data pushed benchmark 10-year Treasury yields below 4% on Thursday for the first time since February and prompted a broad selloff in stocks and other risky investments.

Major indexes reversed an early climb after a key gauge of manufacturing activity fell deeper into contraction territory and the Census Bureau said construction spending declined in June for the second straight month, surprising economists who had expected a climb back toward April's record level.

The Dow Jones Industrial Average fell nearly 500 points. Oil slipped, along with shares of smaller companies. The Nasdaq Composite ended 2.3% lower, erasing most of Wednesday's 2.6% climb, which was the tech-heavy index's best day since February.

The S&P 500 underwent its largest intraday swing since November 2022 and ended down 1.4%. Big declines at drugmaker Moderna, MGM Resorts and numerous technology stocks offset gains in utility shares, another haven asset. Boeing's 6.4% decline -- as well as losses greater than 4% for Intel, Chevron and Caterpillar -- dragged down the Dow industrials. The blue-chip index dropped 1.2%, or 495 points.

The Russell 2000 index of smaller companies, resurgent this summer as investors spread their bets beyond big tech stocks, tumbled 3%.

Investors sought shelter in bonds. The yield on the benchmark 10-year Treasury, which falls when bond prices rise, began declining before the opening bell, when the Labor Department reported an unexpected weekly rise in jobless claims. The descent continued throughout the session, with the 10-year yield settling at 3.977%, down from 4.107% on Wednesday.

The 2-year yield, which often moves with expectations for short-term rates set by the Fed, has lost more than one-quarter percentage point over the past five sessions. It settled Thursday at 4.163%

Thursday's was the largest one-day yield decline since Dec. 13 for both 2-year and 10-year Treasurys.

Bill Merz, head of capital market research U.S. Bank Wealth Management, said the firm has urged clients to shift from money-market funds and other cash-like holdings into longer-duration government bonds before returns decline further.

"Make sure that you're capturing these yields because they're not going to stick around forever," he said. "We're starting to see that play out."

Investors had already started buying up bonds in anticipation of the Federal Reserve soon cutting interest rates. Bonds rallied Wednesday after Fed chairman Jerome Powell said little to dissuade investors from betting that the central bank will reduce borrowing costs at its September meeting. The Fed held rates steady this week.

The Bank of England on Friday cut rates for the first time in more than four years, leaving the Fed among a dwindling number of central banks that have yet to reduce borrowing costs.

The British pound fell relative to the U.S. dollar and the euro. London's FTSE 100 stock index rose 1%.

Scott Pike, senior portfolio manager, Income Research + Management, said that timing the move from short-term bills to longer-term Treasurys is tricky, but the trade has been rewarded lately.

"We probably were at peak rates," he said. "When you're at a point when short-term rates are at their highs, that's usually a pretty good time to at least start considering moving out a little in duration."

In the stock market, quarterly results and corporate sales forecasts continued to produce big moves in individual shares.

Meta Platforms shares climbed 4.8% after Facebook's owner reported an increase in digital ad sales.

Price hikes for its ocean services propelled freight broker C.H. Robinson Worldwide to a 15% gain. Pesticide producer FMC climbed 10%. Burger chain Shake Shack added 17% after second-quarter operating income more than doubled.

Moderna's stock sank 21% after the pharmaceutical firm cut its sales outlook because of weak demand for Covid-19 vaccines.

MGM Resorts lost 13% on its worst day since the Covid lockdown shut its casinos in March 2020. Goodyear Tire & Rubber missed second-quarter sales expectations and fell 16%.