The Australian sharemarket is facing a cautious start to the week after fresh military strikes between the United States and Iran raised fears of higher energy prices, renewed inflationary pressure and further interest rate increases.
At the close of Friday's trading, ASX 200 futures pointed to a flat open, with the contract down just one point.
However, the futures market was pricing in the outlook before the latest weekend strikes, which signalled a potential escalation in a conflict that has continued intermittently for six months.
Wall Street also ended lower on Friday after a stronger-than-expected U.S. jobs report increased expectations that the Federal Reserve could raise interest rates at this month's policy meeting.
The Dow Jones Industrial Average fell 0.5%, while the S&P 500 declined 0.4% and the Nasdaq Composite lost 0.3%.
"The labour market had a nice snapback last month, and it's hard not to think an improving labor market is not a positive development for the economy," Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska was quoted as saying in a Reuters story.
"On the flip side, the odds of a Fed hike increased a little bit as the economy continues to run a little on the hot side."
"We'll get a lot more clarity on inflation next week at the consumer and producer levels," Detrick added, referring to the Labor Department's consumer and producer price indexes.
The Australian sharemarket retreated on Friday, reversing earlier gains despite a strong lead from Wall Street, as investors weighed shifting expectations for U.S. interest rates.
The S&P/ASX 200 fell 14.20 points, or 0.16%, to 9,005.9, although six of the 11 sectors finished higher.
On the bond markets, the 10-year Treasury yield rose 1% to 5.194%, while the two-year yield slipped 0.1% to 4.813%.
