Oz market marches to its own drummer
The Australian sharemarket failed to follow the firmer lead from Wall Street on Wednesday as rising global borrowing costs and weakening jobs growth sapped bullish sentiment.
The S&P-ASX 200 index fell 12.7 points, or 0.21 per cent, to 6094.3 with industrials leading losses as weak wages, slowing jobs growth and rising fuel prices signalled intensifying domestic growth headwinds.
“It’s pretty clear that the Australian market at the moment is marching to its own drummer and that’s further reinforced by the divergence with some of the other markets in the region,” CMC Markets chief market strategist Michael McCarthy said.
Headline jobs data showed a 22,600 increase in new jobs, but the numbers for April were revised down by more than 5000 and March’s blockbuster 65,000 surge in fulltime jobs fell to 20,000.
“The labour market was always set to cool after such a strong 2017,” BIS Oxford Economics head of macroeconomics Sarah Hunter said.
“But such a sharp slowdown is an indication that jobs growth jumped the gun on output growth last year.”
Despite the jobs data proving to be another hurdle for future rate rises, government 10-year bond yields rose 2.2 points to 2.904 per cent after global benchmark US 10years rose 3 points to 3.10 per cent last night, the highest level in almost six years.
The Australian dollar firmed US0.5¢ to US75.30¢ as commodity prices rose overnight. “It’s tempting to attribute the dollar’s comeback to reports yesterday that the Kazakhstan central bank has increased its reserve allocation to Australian dollars from 5 per cent to 8 per cent, but for a central bank with barely $4 billion worth of reserves the flows involved would barely have touched the sides of the FX market,” National Australia Bank global head of currency strategy Ray Attrill said.
Spot iron ore rose 1.1 per cent to $US68 a tonne, while Brent crude oil jumped 2 per cent to $US78.40 a barrel and copper firmed 0.3 per cent to $US6826 a tonne.
Rio Tinto jumped $2.07 to
$86.75, BHP climbed 43¢ to $34.44 and South32 gained 6¢ to $4.03.
Global investors were also nervously eyeing political risk in Italy and the eurozone.
“The untested young leaders of anti-establishment populist parties in coalition talks to govern Italy have argued for freedom from the rules of the eurozone monetary union,” AmpGFX strategist Greg Gibbs said.
“Italian bond yields rose 16 basis points on Wednesday, with some contagion to other periphery government bond markets and European bank stocks.”
Westpac tumbled $1.11 to
$29.10 after going exdividend 94¢, while ANZ climbed 22¢ to $27.99, Commonwealth Bank rose 37¢ to $71.16 and National Australia Bank gained 8¢ to
Telstra added 1¢ to $2.87 and AMP firmed 2¢ to $3.93.