Australia

Australian shares are expected to rise today following modest gains for US equities. The financial sector led markets higher after the Federal Reserve said major US banks could withstand potential economic headwinds. Data on economic growth and unemployment also helped alleviate recession fears.

ASX futures were higher Friday morning, having added 9 points or 0.1% as of 6:00am.

Shares of banks, industrials and other companies sensitive to economic conditions propelled major US stock indices higher after fresh data indicated US growth remains resilient.

The biggest lenders led the charge on Thursday after passing the Federal Reserve's annual stress tests. Goldman Sachs Group, JPMorgan Chase and Bank of America all rose more than 2%, and the financial sector was the S&P 500's biggest gainer with a 1.7% rise.

Cyclical stocks, which tend to boom and bust in tandem with the economy, shined. Shares of materials and industrials companies notched the second-best and third-best performances of the day, respectively.

The S&P 500 rose 0.45% while the Dow Jones Industrial Average added 0.8%, or 270 points. The Nasdaq finished nearly unchanged, still on course to set its best first half of a year on record. Meanwhile, the Canadian benchmark S&P/TSX index gained 0.5%.

In commodity markets, Brent crude oil gained 0.4% to US$74.32 a barrel while gold was little changed at US$1,907.65.

Australian government bonds were higher, with the 2 Year yield increasing to 4.09% and the 10 Year yield rising to 3.90%. US Treasury notes were also higher, with the 2 Year yield climbing to 4.86% and the 10 Year yield edging up to 3.84%.

The Australian dollar jumped to 66.18 US cents from its previous close of 65.99. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, leaned higher to 97.82.

Asia

Chinese shares ended mixed ahead of official June PMI data due Friday, which will give investors more clues on whether China's post-Covid recovery has continued to lose steam. Consumer stocks and developers fell. China Tourism Group Duty Free Corp. dropped 4.2%. China Vanke declined 1.5% and Seazen Holdings shed 4.0%, as the market awaited major property-stimulus measures to shore up the embattled sector. Among gainers were tech-hardware stocks. Foxconn Industrial Internet rose 3.6% and Luxshare Precision Industry added 6.3%. The Shanghai Composite Index dropped 0.2% to 3182.38. The Shenzhen Composite Index ended 0.3% higher, while the ChiNext Price Index edged down 0.1%.

Hong Kong shares ended lower, weighed by a weaker yuan after Federal Reserve Chairman Powell said overnight that the US central bank will likely keep raising rates despite a pause this month. The Hang Seng Index ended 1.2% lower at 18934.36. Tech companies and property stocks weighed on the market. Baidu retreated 4.2% and JD.com dropped 3.7%, with the Hang Seng Tech Index declining 1.7%. The Hang Sang Mainland Properties Index slid 2.0%. Agile Group was 3.9% lower and Seazen Group shed 2.55%. Investors are looking ahead to China's June PMI data due Friday.

Japanese stocks rose, with the Nikkei Stock Average closing 0.1% higher at 33234.14 as gains in auto and electronics shares helped offset losses in food and utility shares. Nissan Motor gained 4.2% and Tokyo Electron Ltd. climbed 2.6% while Kirin Holdings lost 2.9% and Tokyo Gas dropped 2.7%. The broader market index Topix fell 0.1% to 2296.25.

The Indian stock market was closed Thursday in observance of the Islamic holiday Bakra Eid, also known as Eid al-Adha.

Europe

European stocks traded mixed after similarly directionless trading in Asia and a higher US open. The pan-European Stoxx Europe 600 advanced 0.1% and the French CAC 40 climbed 0.4%, though the German DAX traded flat.

In London, utility stocks Severn Trent, United Utilities and Pennon Group were among the biggest fallers amid concerns about the future of indebted water and waste-services group Thames Water. The FTSE 100 Index closed down 0.4% to 7471 points.

"The potential demise of Thames has investors running scared," IG analyst Chris Beauchamp wrote. "Fears of an industry domino effect are at fever pitch, though no other specific names have yet been mentioned. To add to that, UK yields are on the up once again, diminishing the attractiveness of dividend stocks,” Beauchamp added.

Convenience retailer B&M was the index’s worst performer as shares fell 5% after it reported its 1Q update, followed by Rentokil, down 4.7%.

North America

Shares of banks, industrials and other companies sensitive to economic conditions propelled major US stock indices higher after fresh data indicated US growth remains resilient.

The biggest lenders led the charge on Thursday after passing the Federal Reserve's annual stress tests. Goldman Sachs Group, JPMorgan Chase and Bank of America all rose more than 2%, and the financials sector was the S&P 500's biggest gainer with a 1.7% rise.

Cyclical stocks, which tend to boom and bust in tandem with the economy, shined. Shares of materials and industrials companies notched the second-best and third-best performances of the day, respectively. The S&P 500 rose 0.45% while the Dow Jones Industrial Average added 0.8%, or 270 points. The Nasdaq finished nearly unchanged, still on course to set its best first half of a year on record. Meanwhile, the Canadian benchmark S&P/TSX index gained 0.5%.

A stretch of strong economic data that is tamping down recession fears extended Thursday. An updated estimate for first-quarter US economic growth came in at 2%, stronger than previously reported. Weekly jobless claims fell to a multiweek low.

Wall Street continues to debate whether the Federal Reserve can navigate a soft landing -- whereby inflation falls to more normal levels, but higher rates do not push the economy into a deep recession.

"Our base case is that the Federal Reserve is able to engineer a soft landing," said Carol Schleif, chief investment officer of BMO Family Office.

At a meeting this week with other central bank chiefs, Fed Chair Jerome Powell said that inflation remains too high and that further interest rate increases are likely. Traders expect another quarter-point hike at the Fed's July meeting, with chances of another later in the year.

Even another half-point of rate increases should not derail stocks' rally through the first half of the year, according to Schleif. Company earnings results for the second quarter -- due in the coming weeks -- will offer insight into how management teams navigated the March regional banking panic and how they have adjusted their outlooks, she said.

The rebound for cyclical stocks signals that Wall Street is warming to the idea that the economy can skirt a recession -- or at least that one is not on the horizon. US recession expectations have been pushed back to later in 2024, if not 2025, according to a Deutsche Bank survey.

After tech stocks led most of this year's rally, a majority of S&P 500 companies are now higher for the year. That could fuel an extended bull run for the market. But some see the expanded breadth as a sign that market sentiment is peaking, a contrarian indicator that can flash just before stocks reverse course.

"I think that people are underestimating Powell's commitment to knocking inflation," said Phil Pecsok, chief investment officer of Anacapa Advisors.

The rampant pessimism at the end of last year appears to be flipping toward widespread bullishness, according to Pecsok. He is seeing exuberance in the options market, where retail traders are scooping up contracts that would profit from a continued rally.

"I'm going to be a little cautious over the next few weeks," Pecsok said. "But the market could just as easily keep going higher, and we want to participate in that."