Shares edged lower for a fourth day after a jump in unemployment to a 12-year high pulled the dollar down half a cent and fanned speculation that the Reserve Bank will cut the cash rate again next month.
At lunchtime the ASX 200 was 17 points or 0.3% lower at 5752 as the index's week-long retreat from Friday's seven-year high continued. Gains in the health sector +1.8%, IT +1.1% and the Small Ords +0.5% were outweighed by declines in energy -1.2%, utilities -0.7%, financials -0.6% and metals & mining -0.3%.
The dollar sagged after the 11.30am EST announcement of a shock surge in the jobless rate to a level last seen in August 2002. Unemployment rose to 6.4% last month from 6.1% in December as the economy shed 12,200 jobs. The Aussie was lately buying 76.53 US cents.
"The employment numbers were a little weaker than consensus but the shocking part of the numbers was the strong lift in the unemployment rate to 6.4 per cent," CBA economist Diana Mousina told Fairfax. "We think it's a clear sign that the RBA will change the cash rate to 2 per cent in March. Their forecast has been for unemployment to peak at 6.5 per cent in mid-2016 we think there's a chance that now the unemployment peak will be a little bit higher."
Also dampening risk appetite was an inconclusive end to a Eurogroup meeting over Greece's debt crisis. The head of the group of finance ministers meeting in Brussells said discussions will continue on Monday. Read more here.
Asian markets were mixed. China's Shanghai Composite slipped 0.4%, Hong Kong's Hang Seng was off 0.23% and Japan's Nikkei jumped 1.6% upon resumption of trade following yesterday's public holiday. Dow futures were recently down 47 points or almost 0.3%.
Crude oil futures cents rallied 63 cents or 1.3% from the overnight settlement price to US$49.48 a barrel. Spot gold was $2.90 stronger at US$1,222.50 an ounce.
US equity futures don't like the lingering uncertainty over Greece. Steady deterioration all morning. Back home, looks like the RBA knew what it was doing when it cut rates. Odds on another cut in a few weeks have shortened considerably. Good news for property owners, pretty grim for retirees. My wife's aunt and uncle moved all their super into cash during the GFC and left it there. These rate cuts are really starting to pinch. Trading: I'm in a slump. Can't find nearly enough trades, and too many of those that I do take turn sour. Got out of IAG from late yesterday with a slim profit and a good thing, too, as it then tanked. Caught the low in ALK but got a lousy part-fill of 4271 shares and so will postpone the celebrations.
