Thanks Haplo and regulars. Half-time round-up: The share market...

Thanks Haplo and regulars.

Half-time round-up:

The share market declined for the sixth time in seven sessions after the largest ever jump in monthly employment growth drove the dollar higher and resurrected the possibility of rates rises.

At lunchtime the ASX 200 was 11 points or 0.2% weaker at 5562 after earlier running as high as 5597. The index had given up its gains before an 11.30am EST announcement by the Australian Bureau of Statistics that the economy created 121,000 new jobs last month, pushing the jobless rate sharply lower to 6.1% from 6.4% the previous month. Full-time employment increased by 14,300 and part-time employment by 106,700.The result was wildly at odds with expectations for jobs growth of 15,000 and prompted scepticism among some commentators, with one describing the figure as an "embarrassment" to the ABS and another questioning the data's credibility.

"It's an insane number," UBS's Andrew Lilly told Fairfax. "It is a sample error."

The dollar jumped roughly half a cent to 91.92 US cents on speculation that the jobs data bolstered the argument that the next move in interest rates will be up.

Defensive sectors continued to outperform the broader market, with health stocks rising 0.2% and telecoms and utilities 0.2%. The gold sector declined 1.8% near to a three-month low. Other notable falls included metals & mining -0.7%, consumer staples -0.7% and financials -0.1%.

Annual consumer inflation in China eased more than expected to 2% last month from a rate of 2.3% in July. The report was further evidence that the Chinese economy has lost momentum. Chinese investors took the report in their stride, pushing the Shanghai Composite up 0.79%. Hong Kong's Hang Seng rallied 0.25% and Japan's Nikkei 0.48%. Dow futures were recently down 10 points or less than 0.1%.

Crude oil futures bounced 15 cents this morning to US$91.86 a barrel. Spot gold was $1.90 softer at US$1,247.70 an ounce.


Looks like the monthly jobs report just lost all credibility. It's always been erratic, but today's number is plain nuts. We should expect a heavy readjustment next month. The market reaction has been pretty muted, which suggests few attach much credence to the figures. This morning's blog on market manipulation and rorts got me thinking about how much of it traders deal with each day. I'll describe one example this morning which won't surprise anyone who trades the specs, but might be of interest to newcomers or less active investors. I picked up some DRK at 1.2c during last week's dive and decided to take a little off the table this morning. Someone had been hitting the ask at 1.4c, so I wait until the ask queue is empty and then place a modest sell order of 400,000 shares. At the moment I placed my order, the bid queue at 1.3c contained roughly 2,500,000, so the bid:ask ratio was more than 6:1 in my favour. Within the next minute that bid queue reduced steadily by more than two-thirds to about 750,000. Now it's possible that all those would-be buyers just decided spontaneously to cancel their bids at the same time. It would be an odd coincidence, but it's possible. An alternative explanation is that all those bids belonged to a single 'buyer', perhaps even the seller at 1.4c. Since market manipulation is illegal, ASIC would have to accept that the first explanation is the most likely. Almost two and a half hours after I placed my sell order, it's still untouched. There were six buys at 1.4c in the half hour before I placed my sell, none in the two and a half hours since. This may be no more than bad luck. Fortunately, I had better fortune in FXJ, one of my favourite trading stocks. It's harder to manipulate due to its prominence and level of market participation.