Australian shares are expected to slip today, with ASX 200 futures down 0.9% to 8,208 points early this morning.
The expected decline follows a sharp sell-off on Wall Street, driven by stronger-than-expected US jobs data that undermined hopes for significant Federal Reserve rate cuts this year.
Things might be worse for us – a stronger US dollar and rising bond yields have pressured the Aussie dollar, which closed at US$0.6145.
US share markets tumbled on Friday, erasing the S&P 500's gains for 2025.
A blowout non-farm payrolls report, showing 256,000 new jobs in December (survey: +165,000), fuelled concerns about persistent inflation and a cautious Federal Reserve.
The unemployment rate dipped to 4.1%, with average hourly earnings rising 0.3%.
The Dow Jones fell 697 points (-1.6%), the S&P 500 lost 1.5%, and the Nasdaq dropped 317 points (-1.6%).
Rate-sensitive sectors, including real estate and financials, led losses, with their sub-indexes down 2.5%. Small caps fared no better, as the Russell 2000 shed 2.2%.
Europe too
And the rout continued in Europe, where indices posted their steepest decline in three weeks, with the FTSEurofirst 300 index down 0.8%.
Utilities fell 2.3% as rising bond yields impacted their bond-like characteristics. The UK FTSE 100 dipped 0.9% but still marked its third consecutive weekly gain, up 0.3%.
US government bond yields spiked, with the 10-year Treasury yield rising 8 basis points to 4.76%, the highest since November 2023. The two-year yield surged 12 basis points to 4.38%.
Traders now expect the Fed to hold rates steady until at least June – which will rain somewhat on the incoming president’s parade.
Currencies and commodities
Global oil prices surged more than 3% on Friday, hitting three-month highs as markets anticipated disruptions from US sanctions on Russian energy.
Brent crude rose 3.7% to US$79.76 a barrel, while WTI gained 3.6% to US$76.57. Weekly gains stood at 4.2% and 3.5%, respectively.
Gold futures gained 0.9% to US$2,715 an ounce, strengthened as always by safe-haven demand amid ongoing uncertainty.
Spot gold ended near US$2,690, marking a weekly rise of 2.3%.
Copper eased 0.1% on Friday but rose 5.8% for the week. Aluminium gained 1.7% for the session and 3.7% over the week.
Iron ore prices were steady at US$98.09 a tonne but ended the week down 1.4%, which reflected softening seasonal demand despite Chinese stimulus measures.
The US dollar strengthened on Friday. The Euro fell to US$1.0245, while the Australian dollar slipped to US$0.6145. The Japanese yen rose to JPY157.70 per US dollar.
On the horizon
In Australia, the Melbourne Institute's inflation gauge and ANZ-Indeed job advertisements data are on the docket.
Chinese international trade figures are due, and US consumer inflation expectations will be released.