In a surprising Friday night session markets were largely unmoved by significantly stronger US jobs data. The US dollar firmed slightly, ten year bond yields were unchanged and short term interest rates continued to reflect a higher probability of a cut than a lift from the Fed. Energy markets went against the subdued response, with crude oil recording gains of around 3%.

Although futures markets are indicating opening gains, Caixin reads over the weekend showed a further slowing in expansion in China, and regional markets may surprise on the downside.

Non-farm payrolls added 304,000 positions in January, well above the forecast 165,000. The tepid market response is partly explained by a 90,000 downward revision of the December data, and talk of government workers seeking temporary employment during the shutdown. However wages continued to expand at 3.2% pa and the participation rate rose to its highest point in five years. If US macro data continues at this pace markets may be forced into a different view of the future path of interest rates.

Australian investors are on bank watch today ahead of the release of the report from the Royal Commission of Inquiry into the financial sector. The report will become public after market, but late minute jitters may see pressure on the sector, potentially offset by gains in energy and iron ore stocks.