Australia

Australian shares are set to edge lower in trade on Monday, after the US markets tanked on Friday. The Dow Jones Industrial Average index lose over 1,000 points after hawkish comments from the chairman of the US Federal Reserve chairman.

ASX futures were down 104 points or 1.5% at 6922 as of 7:00am on Monday, pointing to a slip at the open.

The Dow Jones Industrial Average sank more than 1,000 points Friday after Federal Reserve Chairman Jerome Powell vowed to keep pressing the fight against inflation, even at the expense of economic growth.

In a highly anticipated speech, Mr. Powell said the Fed must continue raising interest rates and keep them high until inflation is under control. His comments disappointed investors who had hoped inflation had peaked and the Fed would shift from raising rates to lowering them sometime next year.

Friday's selloff capped off two consecutive weeks of losses for major stock indexes and largely wiped out the market's gains since late July. Technology stocks that were flying high earlier this summer took a particular beating, with Amazon.com and Netflix both falling more than 4% for the day.

The Dow shed 1,008.38 points, or 3%, to 32283.40, the blue-chip index's biggest one-day drop since May.

The S&P 500 fell 141.46 points, or 3.4%, to 4057.66. The tech-focused Nasdaq Composite slid 497.56 points, or 3.9%, to 12141.71. The indexes were little changed ahead of the speech, then steadily declined throughout the session, with losses accelerating into the closing bell.

In commodity markets, Brent crude rose 1.66% to $US100.66 a barrel, gold edged down 1.17% to US$1,738.14.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 2.93% while the 10 Year fell to 3.57%. Overseas, the yield on 2 Year US Treasury notes rose to 3.39% and the yield on the 10 Year US Treasury notes inched up to 3.03%.\

The Australian dollar hit 68.86 US cents flat from the previous close. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged up to 100.

Asia 

Chinese shares ended lower, as worries over the heatwave and drought in the country continued to weigh on market sentiment. The benchmark Shanghai Composite Index slipped 0.3% to 3236.22, while the Shenzhen Composite dropped 0.4% to 2146.19 and the ChiNext Price Index fell 1.0% to 2640.29. China-U.S. relations may be in focus, after U.S. authorities said it will suspend over 20 China-bound flights from the U.S. by four Chinese carriers, following Beijing's decision to suspend some U.S. carrier flights over Covid-19 cases. Aviation stocks were mixed, with China Eastern Airlines flat, China Southern Airlines gaining 0.5% and Air China rising 0.8%.

Hong Kong's Hang Seng Index rose 1.0% to 20170.04, extending Thursday's rebound after news that Washington and Beijing are nearing a deal to allow audit inspections of U.S.-listed Chinese companies. Alibaba Group, Meituan and Baidu each gained more than 2%, but Tencent Holdings lost 0.2%. Longfor Group advanced 5.7% after 1H profit held steady and revenue jumped, while PetroChina added 3.3% after 1H profit more than doubled. Shenzhou International led laggards with a 2.7% decline after 1H profit margins weakened. Investors are awaiting the closely watched speech by Fed Chair Jerome Powell at Jackson Hole later today. The benchmark index logged a 2.0% weekly gain.

Japanese stocks end higher, led by gains in machinery and electronics stocks, as concerns abate about the costs of fuel and borrowing. Komatsu Ltd. gains 3.0% and Tokyo Electron Ltd. climbs 2.2%. The Nikkei Stock Average rose 0.6% to 28641.38

Europe

European stocks closed lower after Federal Reserve Chair Jerome Powell reaffirmed the central bank's determination to tame inflation with interest rate rises at Friday's Jackson Hole symposium. The pan-European Stoxx 600 dropped 1.7%, the German DAX shed 2.3% and the French CAC 40 falls 1.7%.

"Powell's message of higher rates for longer, along with a report that the European Central Bank was looking to discuss a 75 basis points rate hike in less than two weeks' time has seen the DAX slide to its lowest levels this week and has led the rest of Europe's markets lower, with the FTSE 100 also heading back towards the lows of the week," CMC Markets analyst Michael Hewson wrote.

In London, the FTSE 100 index closed down 0.7% to 7427.31, returning to levels seen at the beginning of August. "While markets have recently taken solace from the tick lower in inflation, today served to highlight the fact that we remain a long way from the position where rates can be brought under control once again," Joshua Mahony, senior market analyst at IG, said in a note.

Haleon lead a short list of gainers with a 1% rise, followed by the miner Antofagasta, up 0.8%. Among the top fallers, InterContinental Hotels was down 4.4%, Ocado 4.3% and JD Sports 3.4%.

North America

The Dow Jones Industrial Average sank more than 1,000 points Friday after Federal Reserve Chairman Jerome Powell vowed to keep pressing the fight against inflation, even at the expense of economic growth.

In a highly anticipated speech, Powell said the Fed must continue raising interest rates and keep them high until inflation is under control. His comments disappointed investors who had hoped inflation had peaked and the Fed would shift from raising rates to lowering them sometime next year.

Friday's selloff capped off two consecutive weeks of losses for major stock indexes and largely wiped out the market's gains since late July. Technology stocks that were flying high earlier this summer took a particular beating, with Amazon.com and Netflix both falling more than 4% for the day.

The Dow shed 1,008.38 points, or 3%, to 32283.40, the blue-chip index's biggest one-day drop since May.

The S&P 500 fell 141.46 points, or 3.4%, to 4057.66. The tech-focused Nasdaq Composite slid 497.56 points, or 3.9%, to 12141.71. The indexes were little changed ahead of the speech, then steadily declined throughout the session, with losses accelerating into the closing bell.

All three indexes declined more than 4% for the week, following an up-and-down ride in which investors weighed worries over Fed tightening against economic data that pointed to underlying strength in the US economy.

Powell's comments at the Fed's summit in Jackson Hole, Wyo., highlighted how the central bank is preparing to shift from a phase of rapid and large rate increases to potentially one in which it focuses on reaching an interest-rate level that slows hiring, spending and growth, then holds at that level for some time.

"The biggest surprise here is that investors were bracing for Fed Chair Powell to talk tough on inflation, yet are reacting negatively after he did exactly that," said Michael Arone, chief investment strategist at State Street Global Advisors. "It appears investors were naively hoping for a Powell-pivot, but instead he doubled down on the Fed's inflation-fighting credibility."

Friday's stock-market declines were broad, with all 11 of the S&P 500's sectors down for the day and only five stocks in the index eking out gains. Tech was the hardest-hit sector as those shares are particularly sensitive to higher rates.

Google parent Alphabet fell more than 5%. HP and chip maker Nvidia both slid about 9%. Dell Technologies fell 14% after the personal-computer maker warned of a slowing PC market.

Travel and leisure-related stocks also came under pressure, with Caesars Entertainment and Carnival both falling more than 5%.

At the next Fed meeting, officials will likely debate whether interest rates should be raised by 0.5 or 0.75 percentage point. Futures markets indicate that traders are split, with roughly 60% expecting the larger increase and about 40% anticipating the smaller, half-point hike.
"They won't want to be remembered as the central bank that missed inflation or even spurred inflation higher," said Brian O'Reilly, head of market strategy at Mediolanum International Funds.