Australia

Australian shares are set to edge higher after US stocks rose Friday but finished the week with losses. Chinese equities saw sharp gains after reports that US auditors have finished on-site inspections, and on rumours that China might ease it’s COVID restrictions.

ASX futures were up 91 points or 1.32% at 6976 as of 6:00am on Monday, pointing to a gain at the open.

Globally, stocks have come under pressure in recent days as central banks including the Fed and the Bank of England aggressively raise interest rates to combat inflation. Fed Chairman Jerome Powell signaled this week that officials might raise borrowing costs next year more than they had projected.

The Dow Jones Industrial Average lost 1.4% for the week, snapping a four-week winning streak, while the S&P 500 fell 3.3%. The tech-heavy Nasdaq Composite declined 5.6% in its worst week since January.

As they have for months, investors scrutinized the fresh employment data for clues about how much more the Fed may tighten financial conditions as it seeks to cool the economy and bring down high inflation. Employers added a seasonally adjusted 261,000 jobs in October, while wage gains ticked up from the previous month.

"Today's numbers probably weren't numbers the Fed wanted to see," said Rusty Vanneman, chief investment strategist at Orion Advisor Solutions. "They really need some economic softness to slow inflationary pressures, and this number didn't give it."

In commodity markets, Brent crude oil rose 3.9% to $US98.57 a barrel, gold edged up 3.2% to US$ 1,681.87.

In local bond markets, the yield on Australian 2 Year government bonds dropped to 3.26% while the 10 Year fell to 3.84%. Overseas, the yield on 2 Year US Treasury notes rose to 4.66% and the yield on the 10 Year US Treasury notes were at 4.16%.

The Australian dollar hit 64.64 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 102.86.

Asia

Chinese shares rallied, with the Shanghai Composite Index recouping all its losses over the last two weeks. The rebound came after a report that US audit officials have completed the first round of on-site inspections of US-listed Chinese companies and speculation that China might ease its Covid-related restrictions. The Shanghai Composite Index rose 2.4% to 3070.80, the Shenzhen Composite Index increased 2.7% and the ChiNext Price Index was 3.2% higher.

Hong Kong stocks ended sharply higher amid rising investor hopes that the delisting risk for Chinese companies' ADRs may be removed sooner than expected. Speculation that Beijing may be easing its Covid-zero policy further fueled the rebound. The benchmark Hang Seng Index jumped 5.4% to 16161.14, a two-week high. Chinese tech giants, which have been at the center of ADR delisting concerns, led gains. JD.com soared 13% and Alibaba was up 11%.

Japanese stocks ended lower, dragged down by falls in tech companies posting weak results amid persistent concerns about the Fed's continued tightening. Z Holdings tumbled 14% after its first-half net profit fell 26% on year. M3 slumped 9.0% after its first-half net profit dropped 41% on year. The Nikkei Stock Average fell 1.7% .

Europe

European stocks rose in closing trade Friday, boosted by rumours China could relax its strict coronavirus policy.

"These reports, which still haven't been confirmed in any official capacity, have prompted a huge relief rally in equity markets despite concerns that any reopening is unlikely to happen in the immediate future and the very real risk that it is merely a sucker's rally," CMC Markets analyst Michael Hewson wrote.

Heading into winter, it seems highly unlikely China could reopen its economy in any meaningful or sustainable way without triggering a more widespread Covid outbreak, he says.

The pan-European Stoxx Europe 600 rose 1.8%, in London, the FTSE 100 gained 2%, the German DAX advanced 2.5% and the French CAC 40 added 2.8%.

North America

US stocks rose Friday but finished the week with losses after the monthly jobs report did little to shift expectations for continued interest-rate increases from the Federal Reserve.

Stocks have come under pressure in recent days as central banks including the Fed and the Bank of England aggressively raise interest rates to combat inflation. Fed Chairman Jerome Powell signaled this week that officials might raise borrowing costs next year more than they had projected.

The Dow Jones Industrial Average lost 1.4% for the week, snapping a four-week winning streak, while the S&P 500 fell 3.3%. The tech-heavy Nasdaq Composite declined 5.6% in its worst week since January.

As they have for months, investors scrutinized the fresh employment data for clues about how much more the Fed may tighten financial conditions as it seeks to cool the economy and bring down high inflation.

The report Friday left intact the picture of a strong US labor market. Employers added a seasonally adjusted 261,000 jobs in October, while wage gains ticked up from the previous month.

"Today's numbers probably weren't numbers the Fed wanted to see," said Rusty Vanneman, chief investment strategist at Orion Advisor Solutions. "They really need some economic softness to slow inflationary pressures, and this number didn't give it."

Still, there were signs that the economy is slowly losing momentum. The monthly jobs gains were the fewest since December 2020, and wage increases have eased on an annual basis.
Major indexes fluctuated during the day, with stocks rallying in the morning before slipping into negative territory and wavering around the flatline. They rose in the afternoon to end the day higher.

The S&P 500 gained 50.66 points, or 1.4%, on Friday to 3770.55. The Dow industrials added 401.97 points, or 1.3%, to 32403.22. The Nasdaq Composite advanced 132.31 points, or 1.3%, to 10475.25.

With threats to the economy and corporate earnings as the Fed continues to raise rates, few investors expect the markets to settle down soon. "With all the negative news, we think we have a lot of volatile days ahead," said Mace McCain, chief investment officer at Frost Investment Advisors.

One analyst suggested that investors may finally be coming to terms with the Fed's plans for raising interest rates.

"Investors have gone through the five stages of grief this year, and with today's jobs report, maybe they've finally reached acceptance," said Michael Arone, chief investment strategist for SPDR Americas at State Street.

In addition to signs of hawkishness from the Fed, concerning notes from the continuing earnings season may have weighed on stocks recently, said Ellen Hazen, chief market strategist and portfolio manager at F.L.Putnam Investment Management Co.