Unexpectedly strong jobs growth and skinny gains in Asian equities helped the Australian share market rally this morning for the first day in four.
At lunchtime the ASX 200 was up 23 points or nearly 0.6% at 4269 as a broad rally lifted all sectors except gold (-0.2%). Cyclical sectors led the gains, with energy and industrials both ahead 0.8% and small caps up 0.6%.
The dollar kicked higher after the 11.30am EST release of March jobs figures had the unemployment rate steady at 5.2% after the economy added 44,000 new jobs. Economists had tipped a rise in unemployment to 5.3% and job creation of around 6,000. The dollar rose more than half a cent and was recently buying US$1.0377.
RBC Capital Markets senior economist Su-Lin Ong said the data showed interest rate-watchers had got ahead of themselves in predicting cuts to the overnight cash rate of up to one percentage point over the next 12 months.
"It does provide a reminder for markets that pricing in 100 points of cuts is probably too much," she told Fairfax. "If the labour market is a tad firmer, then the RBA clearly is not going to need to lower rates that much."
Most Asian markets edged higher following overnight gains in Europe and the US. Japan's Nikkei added 0.12%, Shanghai was flat and Hong Kong's Hang Seng up 0.14%. Dow futures were recently up 32 points or 0.25%.
Spot gold eased $1.60 this morning to US$1,658.50 an ounce. Crude oil futures were little changed, two cents weaker at US$102.59 a barrel.
A solid morning, if a bit dull. Asian markets have come off a bit since the open. The market took a while to decide whether jobs growth is good (strengthening economy should feed into corporate profits) or bad (reduced chance of future interest rate cuts = a stronger dollar). Just one trade here this morning - GXY. Always interested when shares trade below the placement price. Thanks for the kind words this morning, SSkim and Cgull.
