The share market jumped more than 1% this morning, holding its gains even as unexpectedly strong employment data dented the outlook for further rate cuts.
At lunchtime the ASX 200 was trading 73 points or 1.3% ahead at 5552 and on track for a second straight rise after yesterday breaking a six-session run of losses. Highlights of a broad rally included metals & mining +2.2%, financials +1.8%, energy +1.7% and consumer discretionary +1.4%. Consumer staples was the only sector to miss the bus, falling 0.2%.
The market shrugged off the 11.30am EST release of employment data showing the economy created 42,000 new positions last month, bringing the jobless rate down to 6% - the lowest level in a year - from a downwardly-revised April rate of 6.1%. The dollar surged briefly to 77.9 US cents on the news as analysts reassessed the likelihood that the RBA will need to lower the cash rate again this year. The Aussie was lately buying 77.69 cents.
"What a sweet set of numbers," CommSec economist Savanth Sebastian told Fairfax. "A solid lift in both full-time and part-time employment; a slide in the unemployment rate; and a steady participation rate. Employment surpassed even our rather optimistic expectations."
Other economists were sceptical of the oft-derided data: "The data doesn't gel with other measures like ANZ's jobs ads. For the Reserve Bank, there is no implication in the near term," said RBC Capital Markets strategist Michael Turner.
Asian markets were mixed. China's Shanghai Composite dropped 0.19%, while Hong Kong's Hang Seng added 0.84% and Japan's Nikkei 1.43%. Dow futures were recently down 15 points or less than 0.1%.
Crude oil futures eased 34 cents this morning to US$61.09 a barrel. Spot gold was 70 cents weaker at US$1,185.90 an ounce.
Nice to see good news is occasionally still good news. Or in other words, it's good to see the market find the positives in the jobs report - the economy might be doing better than suspected - rather than focussing on the negatives - this rate easing cycle may be over. Of course, the market was so short-term oversold that a relief rally was pretty much inevitable, whatever the obstacles. Even the GFC had plenty of big counter-trend up-days between the falls to burn the shorts. Trading: CTO has paid a good wage the last two sessions. Also been trading FXJ, a long-time intraday favourite. Backed into a cul de sac in CNU - I like buying at support but should have taken more time to check the trading volume before turning down this particular blind alley. There are always new mistakes to be made.
