US non-farm payrolls (employment) fell by 131,000 in July, above expectations for a decline of 87,000. Private sector jobs rose by 71,000, short of expectations for a gain of 83,000. The unemployment rate was unchanged at 9.5pct, but hours worked rose from 34.1 hours to 34.2 hours.

European shares fell on Friday in response to disappointing US economic data and bank earnings results. The STOXX Europe 600 banks index fell by 1.2pct. The FTSEurofirst index fell by 1.1pct on Friday but gained 1.2pct over the week. The UK FTSE fell by 0.6pct on Friday and the German Dax was lower by 1.2pct.

US sharemarkets fell on Friday in response to weak economic data but ended off the weakest levels. Shares in Office Depot fell by 7pct on concerns about back-to-school sales. The Dow Jones fell by 21pts or 0.2pct after being down 160pts. The S&P 500 lost 0.4pct and the Nasdaq eased by almost 5pts or 0.2pct. Over the week the Dow Jones gained 1.8pct with the S&P 500 up 1.8pct and the Nasdaq was higher by 1.5pct.

US treasuries rose on Friday (yields lower) on speculation that another weak jobs report could prompt the Federal Reserve to add more stimulus to the economy. The Federal Reserve meets on Tuesday. US 2yr yields fell by 3pts to a record low of 0.51pct and US 10yr yields fell by 9pts to 2.82pct. Over the week US 2yr yields fell by 4.5pts and US 10yr yields fell by 9pts.

Major currencies rose against the greenback after weaker-than-expected US employment data. The Euro rose from lows near US$1.3160 to US$1.3325, ending US trade near US$1.3290. The Aussie dollar rose from US91.40c to US92.10c, ending US trade near US91.80c but lifting to US92c this morning. And the Japanese yen rose from 86.15 yen per US dollar to JPY85.10, ending US trade near JPY85.40 but rising to JPY85.30 today.

US crude oil prices fell on Friday as a weak jobs report caused investors to take profit on the solid gains posted over the week. The Nymex crude oil contract fell by US$1.31 or 1.6pct to US$80.70. London Brent crude fell by US$1.45 to US$80.16 a barrel. Over the week Nymex oil rose by 2.2pct.

Base metal prices ended mixed on the London Metal Exchange on Friday. While US employment data disappointed, the weak US dollar added support. Zinc rose 1.5pct and nickel rose 1.0pct while other metals fell 0.4-1.1pct. Over the week base metal prices rose between 0.9-5.1pct with aluminium doing worst and zinc doing best. And the Comex gold price hit three-week highs on Friday as risk-averse assets remained in demand. Comex gold rose by US$6.00 an ounce to US$1,205.30. Gold rose 2.9pct over the week.

Ahead: In Australia, job advertisements and housing finance are released. Earnings results are expected from JB Hi-Fi and Bendigo Bank. In the US no major economic data is due for release.