Australia

Australian shares are set to rise today following modest gains on Wall Street. As investors await key US inflation data later this week, energy and financial stocks led major indices higher. Meanwhile, a positive geopolitical tone with the US helped to boost Chinese shares despite concerns of deflation.

ASX futures were 46 points or 0.7% higher as of 6:30am on Tuesday, suggesting growth at the open.

A potentially busy week for stock markets got off to a quiet start Monday, with US indices edging higher despite an off-day for shares of big technology companies.

Bouncing back from declines last week, the Dow Jones Industrial Average gained 0.6%, or about 210 points. The S&P 500 and the Nasdaq Composite both ticked up 0.2%. In Canada, the S&P/TSX Composite shed 0.1%.

A major engine of this year's stock rally, shares of Microsoft, Apple, and Alphabet, all lost at least 1.1% Monday, with Alphabet leading the way with a 2.5% decline. Meanwhile, financials, energy and industrials were among the better performing sectors.

In commodity markets, Brent crude oil dropped 0.8% to US$77.86 a barrel while gold was unchanged at US$1,924.96.

Australian government bonds were mixed, with the 2 Year yield inching lower to 4.28% and the 10 Year yield slightly higher at 4.28%. US Treasury notes were higher, with the 2 Year yield rising to 4.87% and the 10 Year yield climbing to 4.00%.

The Australian dollar declined slightly, to 66.74 US cents from its previous close of 66.88. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, moved down to 96.60.

Asia

Chinese shares ended higher as consumer brands and travel stocks gained. China Tourism Group added 7.2% after solid 1H revenue growth, while BTG Hotels rose 1.4%. The gains came despite data showing worsened PPI deflation, fanning recovery concerns. Economists at Mizuho said in a note that they expect "more monetary easing through cuts to both RRR and interest rates, as well as targeted fiscal support, to help industrial enterprises." The mood was buoyed by some positive headlines, including tentative signs of progress in stabilizing China-US ties after Treasury Secretary Janet Yellen's visit, and bets that Beijing's tech crackdown is over after its latest round of fines. The benchmark Shanghai Composite Index was 0.2% higher at 3203.70, the Shenzhen Composite Index added 0.3% and the tech-heavy ChiNext Price Index rose 1.4%.

Hong Kong stocks ended the session higher, recovering from a three-day losing streak last week. The benchmark Hang Seng Index rose 0.6% to settle at 18479.72. A broad range of sectors advanced. ENN Energy jumped 6.4%, rebounding from losses late last week. Pork producer WH Group rose 4.5% and Alibaba Health was up 4.1%. Consumer-goods companies also improved from broad weakness. Appliance maker Haier advanced 3.0% and sportswear maker Li Ning rose 2.3%.

Japanese stocks ended lower, dragged by falls in electronics and auto shares after solid US jobs data kept expectations intact for the Fed's further tightening. Yaskawa Electric dropped 3.4% and Nissan Motor shed 2.5%. The Nikkei Stock Average fell 0.6% to 32189.73.

Indian shares ended slightly higher, supported by gains in industrial companies. Reliance Industries advanced 3.8% and Tata Steel climbed 3.4%. Investors have been concerned about the growth momentum in Indian shares after they hit a record high recently. But HSBC analysts said in a note that India's stock rally still has legs given that valuations remain tenable and earnings growth is set to stand out, thanks to potential rural demand and an improved economic growth outlook. The benchmark Sensex rose 0.1% to 65344.17.

Europe

European stocks rose after an upbeat start to the week on Wall Street. The pan-European Stoxx Europe 600 advanced 0.2% while the French CAC 40 and the German DAX both gained 0.5%. Banks and tech stocks were among the biggest risers.

"Friday's gloomy atmosphere has faded to an extent today and stocks have attempted to regain some lost ground," IG analyst Chris Beauchamp wrote. "But it promises to be a choppy week with the US consumer price index (CPI) and then the start of earnings season on the calendar. As Friday's payroll data shows, a recession is still some way off and as a result, more rate hikes are still coming down the line."

Meanwhile, in the United Kingdom, the FTSE 100 inched 0.2% higher to 7273 points, in line with European markets and driven by oil stocks such as Shell and BP, CMC Markets analyst Michael Hewson said in a note.

"UK gilt yields have fallen back for the second day in succession. It’s the first time in over a month we've seen two successive days of declines, which is a sign that perhaps we may have seen the highs in the short term," Hewson added.

The gambling and betting group Flutter Entertainment led the British index’s top performers, closing up 3.2%, followed by Ashtead and Persimmon, up 2.1% and 1.9%, respectively. Retailer Ocado was the worst performer, closing down 1.8% after a target price cut from Barclays.

North America

A potentially busy week for stock markets got off to a quiet start Monday, with US indices edging higher despite an off-day for shares of big technology companies.

Bouncing back from declines last week, the Dow Jones Industrial Average gained 0.6%, or about 210 points. The S&P 500 and the Nasdaq Composite both ticked up 0.2%. Meanwhile, in Canada, the S&P/TSX Composite shed 0.1%.

A major engine of this year's stock rally, shares of Microsoft, Apple, and Alphabet, all lost at least 1.1% Monday, with Alphabet leading the way with a 2.5% decline. Meanwhile, financials, energy and industrials were among the better performing sectors.

Investors and analysts largely shrugged off the poor day for tech stocks, saying some volatility was to be expected ahead of a key inflation report Wednesday and the start of earnings season later in the week.

Before those events, "you'll probably see some shifting around, mostly on positioning, not necessarily fundamentals," said Matt Peron, director of research at Janus Henderson Investors.

Companies outside the tech sector have been helped recently by a run of surprisingly strong economic data. Despite widespread fears earlier in the year that a recession was around the corner, there has been little evidence of a slowdown. Demand for workers is still high, consumer spending remains strong, and even the housing market has shown signs of a possible rebound.

On Friday, the latest monthly jobs report indicated the economy added slightly fewer jobs than expected in June. Even so, the unemployment rate ticked down a notch to an ultralow 3.6%, and wages rose faster than economists had anticipated.

There have been some warning signs outside the US. Data released before the start of US trading Monday showed that China's consumer inflation flatlined in June, while factory-gate prices fell at their fastest pace in more than seven years -- both evidence of weak demand in the world's second-largest economy.

US markets, though, were largely unaffected, as investors remained more worried about inflation at home than deflation elsewhere.

With inflation still well above the Federal Reserve's 2% target, most investors now expect the Fed to raise its benchmark federal-funds rate by a quarter-of-a-percentage point to a range between 5.25% and 5.5% when it meets later this month.

Bets that the Fed will need to raise rates to a higher level than previously expected and then leave them there for longer have recently led to a selloff in bonds and a sharp increase in US Treasury yields.

Many investors and analysts see rising Treasury yields as a threat to stocks because they increase the appeal of government bonds as a safe alternative to riskier investments.

To that end, investors are warily looking forward to Wednesday's consumer-price index (CPI) report, with some worried that a bad inflation report could drive bond yields even higher.

Even if prices rise less than expected, "I still think the Fed is basically biased to hike at this next meeting," said Blake Gwinn, head of US rates strategy at RBC Capital Markets.

On the other hand, he said, higher-than-expected inflation could cause investors to further push out their expectations for when the Fed will start cutting interest rates.