Australia

Australian shares are set to edge lower after the US markets finished Friday flat on the back of a strong jobs report that cast doubts on whether the US Federal Reserve could stop raising interest rates in the near future.

ASX futures were down 7 points or 0.1% at 6907 as of 7:00am on Tuesday, pointing to a slip at the open.

US finished Friday close to flat after a surprisingly strong jobs report cast doubt on the Federal Reserve being able to shift away from interest-rate increases anytime soon.

The S&P 500 dropped 0.2%, making up most of its losses from early in the trading day. The Dow Jones Industrial Average was up 75 points, or 0.2%, and the Nasdaq Composite Index declined 0.5%.

In commodity markets, Brent crude oil rose 0.18% to US$94.29 a barrel, gold edged down 0.9% to US$1,774.92.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 2.59% while the 10 Year fell to 3.08%. Overseas, the yield on 2 Year US Treasury notes increased to 3.24% and the yield on the 10 Year US Treasury notes jumped to 2.83% from 2.67%.

The Australian dollar hit 69.12 US cents up from the previous close of 69.68. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 98.38.

Asia

Chinese shares ended higher, rising in line with regional markets and supported by gains in local banking stocks. China's upcoming July balance of trade data will be in focus, as well any further political fallout from U.S. House Speaker Nancy Pelosi's visit to Taiwan. Pelosi said Friday that Washington will continue to engage with Taipei, despite Beijing's criticism. Oanda's senior market analyst Jeffrey Halley says in a note that the trade data "is unlikely to shake the tree too much," and that "far greater risk lies in the geopolitical sphere, and the property sector slow-moving trainwreck, as well as the usual Covid-zero risks." The benchmark Shanghai Composite Index rose 1.2% to 3227.03, the Shenzhen Composite added 1.4% to 2166.01 and the ChiNext Price Index advanced 1.6% to 2683.60. Bank of China rose 0.3% and Bank of Shanghai gained 0.9%

Hong Kong's Hang Seng Index ended 0.1% higher at 20201.94, as gains by electronics and consumer stocks offset losses by oil majors and auto makers. Alibaba Group lost 2.2% after its June quarter profit fell 50% from a year earlier, while BeiGene jumped 12% after 2Q revenue doubled on year. Sunny Optical and Techtronic Industries added 5.0% and 4.2%, respectively, continuing this week's uptrend. Chinese oil majors retreated amid recent weakness in oil prices. PetroChina slid 2.3% and Cnooc lost 1.2%. The index was up 0.2% for the week, having recovered from losses earlier as U.S. House Speaker Nancy Pelosi's Taiwan visit sparked geopolitical concerns.

Japanese stocks end higher, led by gains in companies which posted strong results, as concerns ease about costs of energy and borrowing. Kikkoman soars 9.3% after the soy sauce maker projected a 4.6% increase in its fiscal-year net profit. Nippon Steel surges 8.3% after first-quarter net profit rose 42% on year. The Nikkei Stock Average rises 0.9% at 28175.87. Investors are focusing on U.S. jobs data due later in the day, as well as corporate earnings. USD/JPY is at 133.38, compared with 132.91 as of Thursday 5 p.m. Eastern Time. The 10-year Japanese government bond yield falls one basis point to 0.160%.

Europe

European stocks fell in closing trade on Friday, with the pan-European Stoxx Europe 600 index down 0.8% at 435.58 after much stronger-than-expected U.S. jobs data increases the prospect of further hefty rate rises by the U.S. Federal Reserve. Germany's DAX and France's CAC 40 fall 0.7%.

"It appears that the Fed can push on yet further, putting another 75 bps rise in play for September," says IG analyst Chris Beauchamp. The data showed non-farm payrolls rose 528,000 in July, well above the consensus forecast in a WSJ poll for a rise of 258,000, while the unemployment rate fell to 3.5%. Equities "wobbled" after the data, though hopes remain that the U.S. consumer can "remain resilient," Beauchamp says.

The FTSE 100 closed down 0.1% as stronger-than-expected jobs data in the U.S. increased the possibility of more high rate rises by the Federal Reserve. WPP was the day's biggest faller, closing down 8.8%, followed by Ocado and Dechra Pharmaceuticals, down 6.3% and 5.4% respectively. Hargreaves Lansdown was the session's biggest riser despite a fall in AuM for FY 2022, closing up 5%, followed by Antofagasta, up 3.6% and Airtel Africa, up 2.6%.

North America

Investors had come to widely believe that the Fed could pivot to cutting interest rates as early as the first half of 2023, given signs of cooling activity across the economy. That would have been a balm for markets, which have tumbled this year as the Fed has swiftly raised interest rates to combat stubbornly high inflation.

But Friday's data showed the labor market was doing anything but cooling. The labor market added 528,000 jobs in July -- more than doubling what analysts had estimated and returning payrolls to their prepandemic level. Meanwhile, the unemployment rate fell to 3.5%, near historic lows.

That left investors with a mixed picture: A key pillar of the economy remains strong, which should be good news for markets. But the strong data means the rate increases that have sent stock and bond prices lower this year aren't likely to go away anytime soon.

"Today's jobs report is the exact opposite of a slowing economy," said Thomas Tzitzouris, head of fixed-income research at Strategas. "This report means it's going to be very difficult to support the view of rate cuts happening anytime before the end of next year."

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Virgin Galactic shares fell 17% after the company delayed its initial launch of tourists into space.

Warner Bros. Discovery shares declined 17% after the new company swung to a $3.42 billion loss in the second quarter, which it said was partly due to charges related to the recent merger that created the media giant.

Zillow Group's shares fell 1.6% after the online real-estate company issued a third-quarter outlook reflecting the slowing demand in the housing market from higher home prices, mortgage rates and inflation.