Australia

Australian shares are set to rise in line with a rally on Wall Street as investors grew more positive about the world’s largest economy amid buoyant retail data and fresh US bank earnings.

ASX futures were up 57 points or 0.9% at 6559 as of 8:00am on Monday, pointing to a rise at the open.

Overseas, the S&P 500 rose 1.9% on Friday, snapping a five-session losing streak. Financial stocks paced the benchmark's gain. Citigroup climbed 13%, State Street added 9.7% and Wells Fargo rose 6.2%. The tech-focused Nasdaq Composite added 1.8%, and the Dow Jones Industrial Average rose 2.1%.

All three indexes suffered weekly losses. The S&P 500 fell 0.9%, the Nasdaq dropped 1.6% and the Dow slipped 0.2% for the week.

Major indexes rallied to end the week on a fresh round of bank earnings and data showing retail sales had climbed more than expected in June. With more than two-thirds of US economic activity tied to household spending, recessions typically are accompanied by a pullback by consumers. Yet the Commerce Department reported that Americans' retail spending rose 1% in June from the prior month, after declining in May.

"You don't get a recession by adding 6 million jobs or having consumer spending that isn't shrinking," said Brad McMillan, chief investment officer at Commonwealth Financial Network. "A lot of the retail report was just inflation. But on the other hand, sales are not going down, either. This doesn't say 'recession.'"

Citigroup and Wells Fargo were among the financial companies that reported earnings ahead of the market open, sparking the rally in the banking sector. Citi posted better-than-expected profit and revenue, while Wells Fargo said a slowdown in mortgage lending hurt its results. As a group, financial stocks within the S&P 500 climbed 3.5%.

Locally, the S&P/ASX 200 Australia's S&P/ASX 200 closed 0.7% lower at 6605.6, with losses among commodity and financial stocks completing a weekly reverse for the benchmark index. The ASX 200 clawed back some ground after falling 1.7% at the open, but it still slipped 1.1% for the week.

The materials sector shed 3.2% and provided eight of the ASX 200's 10 biggest losers on Friday. Iron ore miners Rio Tinto, BHP and Fortescue gave up between 2.85% and 6.2% amid lower commodity prices, while most lithium and gold stocks also fell.

Shares of wealth managers led the financial sector lower, while banks Westpac, ANZ and Macquarie lost between 0.2% and 1.8%. Strength among consumer staples and health stocks partially offset weakness elsewhere.

ANZ announced before the bell on Monday morning that it would buy Suncorp’s banking arm for $4.9 billion. The bank will raise $3.5 billion in new equity to help fund the deal. The deal will require approval for the competition watch dog.

In commodity markets, Iron ore fell 3.6% to $US96.60 a tonne, Brent crude oil gained 2.1% to $US101.16 a barrel, while gold declined 0.1% to US$1,703.60.

In local bond markets, the yield on Australian 2 Year government bonds is up 2.53% while the 10 Year also rose to 3.40%. Overseas, the yield on 2 Year US Treasury notes moved up to 3.12% and the yield on the 10 Year US Treasury notes increased to 2.92%.

The Australian dollar is up 0.6% to 67.93 US cents as of 7.30am AEST. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies fell to 99.82.

Asia

China stocks ended broadly higher. The benchmark Shanghai Composite Index inched 0.1% lower to 3281.74, the Shenzhen Composite Index gained 0.8% to 2192.70 and the ChiNext Price Index advanced 2.6% to 2819.13. Auto stocks were mixed, with BYD Co. climbing 4.2% while SAIC Motor was 1.1% lower. Sentiment was partly supported by recent data showing that China's trade surplus in June surged to $97.94 billion, its highest on record, OCBC analysts said in a note. "China's 10.3% total trade growth in the first half of 2022 showed that China continued to gain market share of global trade," they added.

Hong Kong's Hang Seng Index ended lower for the fifth straight session, losing 2.2% to 20297.72, weighed by weak sentiment on the real estate and tech sectors. A selloff in property shares continued amid a movement by Chinese homeowners to stop paying mortgages on unfinished homes. Country Garden topped laggards with a 8.6% decline, Longfor Group skidded 6.2% and China Overseas Land slid 3.9%. Alibaba Group retreated 6.0% after the WSJ reported that officials have called in executives at the company's cloud division regarding data theft. BYD Co. bucked the downtrend, rising 4.0% after an upbeat profit alert, forecasting 1H net profit to more than double on year. The benchmark index declined 6.6% this week.

The Nikkei Stock Average ended 0.5% higher at 26788.47 as gains for Fast Retailing offset losses in financial stocks. The Uniqlo owner jumped 8.7% after it boosted fiscal-year earnings guidance. Dai-ichi Life Holdings fell 3.1% and Mitsubishi UFJ Financial Group shed 2.5% as concerns grow about the global economic outlook due to fast tightening of monetary policy by major central banks. The broader market index, Topix, ended flat at 1892.50.

Europe

European stocks advanced as US equities gained after better-than-expected US economic data. The pan-European Stoxx Europe 600 advanced 1.8%, the German DAX increased 2.8% and the French CAC 40 ended up 2%. Vitrolife is the biggest riser on the Stoxx, up 15%, after the Swedish IVF products company posted strong 1H earnings.

"We are seeing yet another attempt at a 'bear market rally', and a decent one is certainly overdue," IG analyst Chris Beauchamp writes. Better US retail sales figures may have played a part in this rally, while investors seem keen to take advantage of bargains following recent falls in equities, he says.

The FTSE 100 closed Friday up 1.80% in a strong recovery, with adventurous dip buyers wading back into the fray.

Better US retail sales figures may have played a role in the global bounce-back, Mr. Beauchamp adds. That said, even if inflation pulls back in coming months, a halt to the rate of price rises seems unlikely, and investors should be aware the summer rally is probably but a brief dalliance, Mr. Beauchamp says.

North America

US stocks rebounded Friday, capping a volatile week during which investors tried to reconcile a flurry of corporate-earnings reports and data that at times appeared to offer conflicting narratives on the economic outlook.

Major indexes rallied to end the week on a fresh round of bank earnings and data showing retail sales had climbed more than expected in June. They tumbled earlier on a new reading showing inflation at yet another four-decade high and as some of the biggest US banks posted disappointing quarterly results.

The S&P 500 rose 1.9% on Friday, snapping a five-session losing streak. Financial stocks paced the benchmark's gain. Citigroup climbed 13%, State Street added 9.7% and Wells Fargo rose 6.2%. The tech-focused Nasdaq Composite added 1.8%, and the Dow Jones Industrial Average rose 2.1%.

All three indexes suffered weekly losses. The S&P 500 fell 0.9%, the Nasdaq dropped 1.6% and the Dow slipped 0.2% for the week.

The market's volatile turn may be a sign the 2022 selloff is nearing a bottom, said Brad McMillan, chief investment officer at Commonwealth Financial Network. Companies' stock prices are now more closely aligned to projected earnings, and many investors are already accounting for the effects of rising interest rates, he said.

"We're in a bottoming process," Mr. McMillan said. "What you're seeing now depends on whether you see earnings as good or bad. Yesterday was bad, but we're still seeing expected earnings growth."

The S&P 500 traded recently at 16 times its projected earnings over the next 12 months, down from 21.5 times at the end of last year, according to FactSet. Analysts project quarterly earnings rose 4.2% in the latest quarter, according to FactSet.

Investors are trying to assess how officials will balance the need to tame inflation with concerns over a potential recession. US consumer inflation accelerated to 9.1% in June, a pace not seen in more than four decades, boosting expectations among traders that the Federal Reserve will raise interest rates more aggressively to tame it. At the same time, tighter financial conditions could weigh on growth.

With more than two-thirds of US economic activity tied to household spending, recessions typically are accompanied by a pullback by consumers. Yet the Commerce Department reported that Americans' retail spending rose 1% in June from the prior month, after declining in May.

"You don't get a recession by adding 6 million jobs or having consumer spending that isn't shrinking," Mr. McMillan said. "A lot of the retail report was just inflation. But on the other hand, sales are not going down, either. This doesn't say 'recession.'"

US consumer sentiment levelled off in early July, staying at subdued levels amid concerns over inflation and a coming economic recession. The preliminary estimate of the consumer sentiment index published Friday by the University of Michigan increased to 51.1 in July from 50.0 in June, hovering near its all-time low.

"Recession risks have risen since the beginning of the year," said Mike Bell, global market strategist at J.P. Morgan Asset Management. "If we don't get any signal of consumer retrenchment, maybe it's not as bad as people fear, but if we do get that it's a signal recession risk is materializing."

Citigroup and Wells Fargo were among the financial companies that reported earnings ahead of the market open, sparking the rally in the banking sector. Citi posted better-than-expected profit and revenue, while Wells Fargo said a slowdown in mortgage lending hurt its results.

State Street also beat Wall Street's expectations. US Bancorp gained $2.32, or 5.2%, to $46.57, while Bank of America rose $2.12, or 7%, $32.25. As a group, financial stocks within the S&P 500 climbed 3.5%.

Shares of Pinterest jumped $2.84, or 16%, to $20.40. The Wall Street Journal reported that activist investor Elliott Management has taken a big stake in the social-media company. Vonage Holdings shares rose $1.33, or 6.8%, to $20.98 after Swedish telecom-equipment giant Ericsson said the Committee on Foreign Investment in the US had authorized its $6.2 billion proposal to buy the company.

UnitedHealth Group shares added $27.32, or 5.4%, to $529.75 after the company raised its outlook for the second consecutive quarter and posted higher revenue and profit for the recently ended period.

In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 2.929% from 2.957% Thursday. Yields and prices move inversely.

In energy markets, Brent crude, the international benchmark for oil prices, rose 2.1% to $101.16 a barrel.