Local shares are poised to extend their losses, though the pace of selling appears to be far slower than on Friday.

What you need2know:

• SPI futures down 26 pts at 5473

• AUD at 93.11 US cents, 95.49 Japanese yen, 69.35 Euro cents and 55.33 British pence.

• On Wall St, S&P 500 -0.3%, Dow -0.4%, Nasdaq -0.4%

• In Europe, Euro Stoxx 50 -1.4%, FTSE -0.8%, CAC -1%, DAX -2.1%

• Spot gold rose 0.8% to $US1293.33 an ounce

• Iron ore slips 0.4% to $US95.20 per metric tonne

• Brent oil down 1.1% to $US104.84 per barrel.

 

What’s on today

Australia retail sales, ANZ jobs advertisements; UK construction PMI; Euro zone producer price index; US ISM New York

Stocks to watch

JPMorgan has downgraded Australia’s biggest annuities provider, Challenger, to “underweight” following concerns about investment spread margins, capital intensity and default risk concerns.

Hartleys Research maintains an “accumulate” on Independence Group, but said while “nice and profitable” it was looking for growth now. It holds a $4.26 a share price target.

Deutsche Bank has a “hold” recommendation on OceanaGold and a target price of $3.10 a share after its June quarter report was weaker than expected.

Currencies

HSBC said in a report that in its post-board and quarterly statements on Tuesday, it expects the Reserve Bank of Australia to repeat that the Australian dollar remains higher than the central bank would like.

Late in New York on Friday, the US dollar index had slipped 0.16 per cent to 81.327, retreating further from Thursday’s 10-1/2-month high of 81.573. The index, however, posted its third straight weekly gain, largely on the view that recovering US economic growth would pave the way for a more hawkish Fed.

Twelve of 18 US primary dealers, or the banks that deal directly with the Fed, said the US central bank's first rate increase would occur between July 2015 and June 2016, a new Reuters survey found.

Commodities

Copper dipped on Friday after Chinese data showing manufacturing growth was not enough to outweigh prospects for slowing economic growth and a weaker-than-expected US jobs report.

Brent and US crude futures tumbled on Friday to the lowest settlement prices in months, as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine. Oil prices ended the week down more than 3 per cent.

Commonwealth Bank global markets research <b>downgraded iron ore prices as miners around the world commission new mines and reduce costs at existing mines. “These forces should weigh more heavily on the market, leading to lower prices than previously anticipated, despite better demand,” CBA said.

United States

US stocks ended lower for a second day and the S&P 500 posted its biggest weekly decline since 2012 on Friday.Seven of the 10 S&P 500 sectors ended lower, with S&P financials among sectors with the biggest losses.

"I wouldn't use this weakness to add to positions,” said Nick Sargen, chief economist at Fort Washington Investment Advisors in Cincinnati. “We're still not cheap by any means, and this could be the start of the 10 per cent correction that's been long overdue."

US Labor Department reported that 209,000 jobs were created in July, below the 233,000 that economists had expected, while data from the Institute for Supply Management showed that manufacturing had its fastest expansion in more than three years in July.

Europe

European stocks fell to three-month lows on renewed concerns about Portugal's bank sector and the German economy's exposure to Russia, particularly how sanctions against Russia will hit local corporate results.

Portugal’s main exchange slumped 3.04 per cent, dragged down by banking shares after stricken lender Banco Espirito Santo reported a record first-half loss on Wednesday. Portuguese authorities are considering using public funds to help keep the country’s largest listed bank solvent.

ArcelorMittal slumped 6.11 per cent after the steel titan reduced its outlook for 2014 because of a lower-than-expected iron ore price, even as it reported a return to profit in the second quarter.

What happened on Friday

The local sharemarket was jolted out of its reverie following a massive sell-off on Wall Street, signalling a return to more volatile times after months of passivity on dealing desks around the world.

“Part of the reason we’ve been due for a day of red on the screens like this is people start to forget about risk,” said Investors Mutual senior portfolio manager Hugh Giddy.

A 317-point dive for the Dow Jones on Thursday night set up the biggest fall for Australian shares since March on ­Friday, wiping out $2.1 billion in ­market value or 1.4 per cent off the S&P/ASX 200.