ASX Futures

ASX futures were flat as of 8:00am on Tuesday.

US Stocks

US stocks fell Monday, continuing their decline after strong jobs data last week raised the prospect of more interest rate increases by the Federal Reserve. The S&P 500 closed 0.6% lower after falling 1% on Friday. The Dow Jones Industrial Average fell 0.1% while the technology-heavy Nasdaq Composite declined 1%.

Stocks ripped higher at the start of 2023, boosted by wagers that slowing inflation would cause the Fed to pivot from hiking rates to cutting them later this year. But Friday's surprisingly strong jobs report suggested the Fed might feel the need to keep raising rates to curb wage growth, and then hold rates steady for an extended period, investors said.

Commodity Markets

In commodity markets, Brent crude oil added 1.66% to $US81.27 a barrel while gold edged up 0.16% to US$1,867.99.

Australian government bonds edged higher, with the 2 Year yield rising to 3.06% and the 10 Year edging up to 3.46%. Yields on US Treasury notes were also higher, with the 2 Year climbing to 4.46% and the 10 Year rising to 3.63%.

The Australian dollar slid from 69.19 US cents to close at 68.80. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged higher to 96.57.

Asia

Chinese Stocks

Chinese stocks ended the session lower, in line with broad losses among Asian equities. News of stronger-than-expected US job growth in January raised worries over more aggressive interest rate increases. The benchmark Shanghai Composite Index lost 0.8% to settle at 3238.70, while the Shenzhen Composite Index also dropped 0.8% to 2145.19. The tech-heavy ChiNext Price Index was the worst performer, ending 1.4% lower at 2544.09. Gold miners led losses after the precious metal's prices dropped late last week amid rising concerns over higher interest rates. Chinese liquor producers further weighed on the market, as the sector retreated from its recent rally.

Hong Kong Stocks

Hong Kong stocks ended the session lower, following broad regional losses. Friday's strong US job growth data has triggered renewed worries over aggressive monetary tightening by the Fed, which weighed on investor appetite for Asian equities. The benchmark Hang Seng Index lost 2.0% to settle at 21222.16. A variety of sectors weakened, with Alibaba Health diving 7.2%, Sunny Optical slumping 6.9% and Country Garden Services down by 6.1%. The Hang Seng Tech index finished 3.65% lower at 4464.82.

Japanese Stocks

Japanese stocks ended higher, led by gains in trading and real estate companies. Hopes grew for continued easing of interest rates in Japan following a media report that the government has approached Bank of Japan Deputy Gov. Masayoshi Amamiya as a candidate to succeed Gov. Haruhiko Kuroda. Mitsubishi Corp. jumped 7.8% after it raised its fiscal year net profit forecast and announced a share buyback. Marubeni Corp. gained 4.2% and Sumitomo Realty & Development climbed 4.1%. The Nikkei Stock Average rose 0.7% to close at 27693.65.

Indian Stocks

Indian stocks ended lower amid a broad selloff in Asian equities on Monday. The region's losses followed last Friday's decline on Wall Street, after stronger-than-expected US job growth data triggered renewed investor worries over more aggressive monetary tightening by the Fed. The benchmark Sensex index lost 0.55% to settle at 60506.90. A wide range of sectors weighed on the index, with lender Kotak Mahindra Bank shedding 1.9%, IT-services provider Infosys down 1.8% and vehicle manufacturer Mahindra & Mahindra dropping 1.15%.

Europe

European stocks dropped after mostly downbeat trading and ahead of predicted US losses. The pan-European Stoxx Europe 600 and the German DAX retreated 0.8% while the French CAC 40 shed 1.3%. Property stocks were among the biggest fallers, although banks gained.

The British FTSE 100 closed down 0.8% Monday amid stronger-than-expected jobs figures in the US, which the Federal Reserve monitors closely when making rate decisions, AJ Bell analyst Russ Mould said in a note. "Ongoing strength in the labor market theoretically reduces the chances of the central bank taking its foot off the pedal when it comes to rate rises," he noted. Prudential was the session's biggest faller, down 4.8%, followed by Ocado and Hargreaves Lansdown, down 3.4% and 3.3% respectively. Airtel Africa was the day's biggest riser, up 3.5%, followed by Centrica, up 1.8%, and GSK, which was up 1.5%.

North America

US stocks fell Monday, continuing their decline after strong jobs data last week raised the prospect of more interest rate increases by the Federal Reserve. The S&P 500 closed 0.6% lower after falling 1% on Friday. The Dow Jones Industrial Average fell 0.1% while the technology-heavy Nasdaq Composite declined 1%.

Stocks ripped higher at the start of 2023, boosted by wagers that slowing inflation would cause the Fed to pivot from hiking rates to cutting them later this year. But Friday's surprisingly strong jobs report suggested the Fed might feel the need to keep raising rates to curb wage growth, and then hold rates steady for an extended period, investors explained.

Market Expectations

"What seems to have driven markets this year seems to be expectations of either fewer rate hikes or, after the peak in rates, some fairly significant rate cuts, as well as perhaps some more optimism over global growth, particularly in Europe and China," said Edward Smith, co-chief investment officer at Rathbones.

"The selloff in the last couple of days might be some realization, particularly on the rates side of things, that the markets got carried away," he said. Given how rapidly prices have been rising, Mr. Smith added, "We've got a long way to go. That's going to keep the Fed from delivering those rate cuts."

Fed Chairman Powell

Fed Chairman Jerome Powell is due to give an interview on Tuesday. Investors will listen closely for clues about the central bank's response to the job numbers.

The focus will be on whether Mr. Powell emphasizes the central bank's view that short-term rates will peak at more than 5%, said Jim Reid, a strategist at Deutsche Bank, compared with the current range of 4.5% to 4.75%.

Traders in interest rate futures see a more than two-thirds chance that the Fed's target will still be at 5% or above by late September, according to CME Group, up from less than a 50% chance last week.

Corporate Earnings

Monday marked the start of another busy week for US corporate earnings. Gaming companies Activision Blizzard and Take-Two Interactive Software are due to report after Monday's close, as is Pinterest. The private equity groups KKR, Carlyle Group and Apollo Global Management are scheduled to file results in the coming days, as are others such as Disney, DuPont, PepsiCo and Uber Technologies.

Stock Moves

All of the S&P 500's 11 sectors were in negative territory on Monday afternoon, with tech, communications and materials stocks posting some of the sharpest losses. Shares of Dell Technologies fell 2.9% after the computer manufacturer said it would cut 5% of its workforce due to worsening market conditions.

A flurry of news related to mergers and acquisitions drove moves in some stocks. Newmont fell 4.8% after the gold mining company made a roughly $17 billion offer for Australia's Newcrest Mining. Public Storage slipped 0.3% after saying it had made an $11 billion unsolicited offer for Life Storage, whose shares surged 12%. Shares in Catalent rallied 20% after Bloomberg News reported that Danaher had expressed interest in taking over the contract manufacturer.