Australia

Australian shares are expected to climb today despite Friday’s losses in the US and Asia. Although job growth cooled slightly in June, rising wages and shrinking unemployment in the US caused many investors to worry that the Federal Reserve is all but guaranteed to hike interest rates again this month.

ASX futures were higher Saturday morning, having gained 37 points or 0.5% as of 6:00am.

A stretch of strong economic data hardened investors' expectations of further interest rate increases, fueling a lockstep weekly decline for US stocks and government bonds.

The narrow weekly losses put a dent in a period of extraordinary market calm, during which major stock indices have jumped to some of the highest levels of the past year. For much of the summer, volatility has ebbed and stocks have continued a steady climb.

All three major indices slipped Friday. The S&P 500 lost 0.3%, while the Dow Jones Industrial Average fell 0.6%. The tech-heavy Nasdaq Composite shed 0.1%. Meanwhile, in Toronto, the S&P/TSX Composite managed a 0.1% gain.

In commodity markets, Brent crude oil added 2.5% to US$78.44 a barrel while gold gained 0.8% to US$1,925.27.

Australian government bonds were higher, with the 2 Year yield increasing to 4.30% and the 10 Year yield rising to 4.25%. US Treasury notes were also higher, with the 2 Year yield climbing to 4.94% and the 10 Year yield reaching 4.05%.

The Australian dollar inched higher, at 66.94 US cents, compared to its previous close of 66.23. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 96.81.

Asia

Chinese shares ended lower, widening their losses this week amid growing concerns over the post-Covid economic recovery. Comments by US Treasury Secretary Janet Yellen, in which she expressed concerns over China's latest export controls, also weighed on sentiment. Chip makers and software makers were lower. Semiconductor Manufacturing International Corporation dropped 1.2% and Beijing Kingsoft Office Software was 0.5% lower. Among the gainers were retailers and transportation companies. Beijing-Shanghai High-Speed Railway increased 2.2% and Yonghui Superstores was up 0.6%. The benchmark Shanghai Composite Index closed 0.3% lower at 3196.61, finishing the week down 0.2%. The Shenzhen Composite Index fell 0.7% and the tech-heavy ChiNext Price Index declined 1.05%.

Hong Kong stocks ended the session lower, extending a losing streak. The benchmark Hang Seng Index slid 0.9% to settle at 18365.70. Losses were broad-based, with a wide range of sectors pulling back from earlier gains. ENN Energy lost 7.7% and Xinyi Solar was down 6.8%. Consumer-product makers also dragged on the market, with Li Ning and China Mengniu both dropping 4.3%. Smartphone maker Xiaomi lost 3.05% and car maker BYD fell 3.0%.

Japanese stocks ended lower, dragged by falls in electronics and auto shares, as concerns persisted over the likelihood of further policy tightening by the Federal Reserve. Panasonic Holdings dropped 2.8% and carmaker Subaru shed 2.5%. The Nikkei Stock Average fell 1.2% to 32388.42.

India's Sensex index fell 0.8% to close at 65280.45 amid worry over further Fed tightening, driven by strong US economic data released overnight. There are concerns that central banks appear prepared to risk "crushing" demand and push economies into recession to bring inflation under control, which is spurring investors to pare their exposure to equity markets, Michael Hewson, chief market analyst at CMC Markets, said in an email. Among the worst performers on the benchmark index, Power Grid Corp. of India slipped 2.8%, IndusInd Bank dropped 2.3% and Hindustan Unilever was down 2.2%.

Europe

European stocks inched higher Friday after a downbeat session for most Asian markets. The pan-European Stoxx Europe 600 added 0.1%, the German DAX moved up 0.5%, and the French CAC 40 gained 0.4%.

Meanwhile, the United Kingdom’s FTSE 100 index lost 0.3%, to 7256 points, despite a bounce in energy and commodity-exposed stocks. Pharmaceutical and consumer goods companies weighed on the index, which underperformed its peers amid increasing concerns over further monetary tightening, Interactive Investor head of investment Victoria Scholar said in a note.

"Bank of England could raise interest rates to 7% with the risk of a 'hard landing' for the UK economy next year. However, the analyst team's base case is for the bank rate to peak at 5.75% in November," Scholar added. The information-and-analytics group RELX was the index’s worst performer, down 2.9%, followed by Intertek and Severn Trent, down 2.5% and 2.3% respectively.

North America

A stretch of strong economic data hardened investors' expectations of further interest rate increases, fueling a lockstep weekly decline for US stocks and government bonds.

The narrow weekly losses put a dent in a period of extraordinary market calm, during which major stock indices have jumped to some of the highest levels of the past year. For much of the summer, volatility has ebbed and stocks have continued a steady climb.

All three major indices slipped Friday. The S&P 500 lost 0.3%, while the Dow Jones Industrial Average fell 0.6%. The tech-heavy Nasdaq Composite shed 0.1%. Meanwhile, in Toronto, the S&P/TSX Composite managed a 0.1% gain.

Some of the recent data kindled a familiar fear -- that signs of a hot economy would lead the Federal Reserve to raise interest rates higher than expected. Data on Thursday showed that the private sector added 497,000 jobs in June, well above the gain of 220,000 forecast by economists polled by The Wall Street Journal.

Other releases similarly suggested that the US economy is far more resilient than many investors expected, upending Wall Street's bets on an imminent recession. For example, the Institute for Supply Management said Thursday that its index of services activity rose to 53.9 in June from 50.3 in May. A reading above 50 indicates expansion. The spate of hot economic data led to the worst day for the S&P 500 since May on Thursday.

"We don't see the recession" in the data, said Julien Stouff, founder of hedge-fund firm Stouff Capital in Geneva.

Many investors also remained focused on wage growth, which came in higher than economists expected in Friday's monthly jobs report and pressured major indices in early trading. Average hourly earnings rose 0.4% from the month earlier, above what economists had expected. Many analysts and investors said the data kept the Fed on track to raise interest rates again later this month.

"This adds to the narrative that the Fed has more work to do," said Mona Mahajan, senior investment strategist at Edward Jones.

Still, optimism crept back into the market to end the week, helping the S&P 500 pare some of its losses in midday trading Friday, before finishing lower. Some investors appeared focused on the fact that the US continues to add jobs, though at a more modest pace.

Although the headline number on Friday's jobs report missed expectations -- and snapped a historic stretch of beats -- the data revealed a job market that remains historically tight. The US has been adding jobs at a pace rarely seen in recent decades.

At times, the strong data has burned bets that the US economy would tip into a recession, catching traders flat-footed. Many had wagered that sectors sensitive to the economy, such as industrials and consumer-focused segments, would tumble as the economy entered a downturn.

Instead, they have kept flourishing. That led to an extreme short squeeze in recent sessions, one of the most violent of the past few years, said Edouard Matitia-Cohen, a managing director within Bank of America's prime financing team.

"It has been an accumulation of a squeeze and it accelerated last week," Matitia-Cohen said.
Smaller companies in the Russell 2000, which tend to be more economically sensitive, outperformed the S&P 500, gaining 1.2% even as the broader index fell.

Energy stocks climbed alongside oil prices. Brent crude, the global benchmark, was up roughly 2.5% at about $78 a barrel. Shares of the giant companies that help energy producers around the world find and extract oil and gas led the market higher, with some of their big US customers not far behind.

Schlumberger and Halliburton, which frack wells in Texas and orchestrate deep ocean-drilling projects, rose more than 8% and 7%, respectively. US producers Diamondback, APA, Marathon Oil and EOG were each up roughly 4%.

In corporate news, shares of Meta Platforms added 1.2% for the week after the company launched its microblogging platform Threads, a competitor to Twitter. Shares of Rivian jumped 48% over the past eight sessions after the company said its quarterly deliveries rose. Competitor Tesla added almost 5% for the week after it also said that its deliveries rose in the latest quarter.