In US economic data, labour costs rose at a 0.6 per cent annual rate in the June quarter while productivity rose by 2.5 per cent. Economists had tipped a 1.4 per cent lift in labour costs and 1.5 per cent rise in productivity. Wholesale inventories rose by 0.3 per cent in June with sales up 0.2 per cent, both short of forecasts.
In Chinese economic data, producer prices fell 0.9 per cent over the year to July, while consumer prices rose by 2.3 per cent, both as expected.
European shares fell to 4-month lows on Friday with investors fearful of the consequences of US military strikes into Iraq. The FTSEurofirst 300 index fell by 1.2 per cent with the German Dax down by 0.3 per cent while the UK FTSE lost 0.5 per cent. But Australia's major miners were higher in London trade with shares in BHP Billiton up by 0.7 per cent while Rio Tinto rose by 0.2 per cent.
US sharemarkets rebounded sharply on Friday after Russia said it concluded military exercises near the Ukrainian border. The Dow Jones index rose by 185 points or 1.1 per cent with the S&P 500 index up by 1.2 per cent while the Nasdaq rose by 36 points or 0.8 per cent. Over the week the Dow rose by 0.4 per cent while the S&P 500 rose by 0.3 per cent and the Nasdaq gained 0.4 per cent.
US treasury prices steadied on Friday. US 2-year yields were flat at 0.448 per cent while US 10-year yields were up by 1 point to 2.422 per cent. Over the week US 2-year yields fell by almost 2 points while US 10-year yields fell by 6 points.
The euro and commodity currencies were firmer against the US dollar following news of the end to Russian military exercises. The euro rose from lows near $US1.3355 to around $US1.3430, before ending US trade near $US1.3410. The Australian dollar lifted from lows near US92.40c to highs near US92.85c before ending the US session close to US92.75c. But the Japanese yen eased from 101.50 yen per US dollar to JPY102.08, ending US trade near JPY102.04.
World oil prices were mixed on Friday. Brent fell on the view that US military strikes in Iraq could reduce the prospect of disruptions to oil supplies. But Nymex crude rose as the sharemarket rebounded and the US dollar fell. Brent crude fell by US42c or 0.4 per cent to $US105.02 a barrel but the US Nymex price rose by US31 cents a barrel to $US97.65 a barrel. Over the week Brent rose by US18c a barrel while US Nymex lost US23c.
Base metal prices fell by up to 1.8 per cent on Friday with nickel down the most. But tin was flat and aluminium rose by 0.1 per cent. Over the week, base metal prices were mixed with aluminium up 2.9 per cent with zinc down by 2.3 per cent. Gold prices fell slightly on Friday with the Comex gold futures quote down by $US1.50 or 0.1 per cent to $US1,311.00 per ounce. Over the week gold rose by $US16.50 an ounce. Iron ore fell by US30c on Friday or 0.3 per cent to $US95.70 a tonne. But over the week iron ore rose by US50c.
Ahead: The Australian sharemarket should get off to a stronger start following good gains in the US. US sharemarkets rebounded sharply on Friday after Russia said it concluded military exercises near the Ukrainian border. In Australia the futures market is indicating a 37 point rise of the ASX 200 at the start of trade. There will be some caution by investors ahead of key earnings reports later in the week.
In Australia, lending finance data is released. In the US, no major economic data is scheduled.
Craig James is chief economist at Commsec.