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Healthy job market surprises Aussie market

Daily Market Update

On Thursday the Australian share market had to deal with the release of robust jobs data, which sparked predictions that the Reserve Bank of Australia could again lift interest rates.

Employment rose by 53,000 in March, while the unemployment rate remained steady at a 50-year-low of 3.5 per cent, according to Australian Bureau of Statistics (ABS) figures released on Thursday. The surprisingly strong data has left the Reserve Bank in a predicament, and seemed to make many investors think that further rate hikes could be on the way.

The benchmark S&P/ASX200 index closed down 19.8 points, or 0.27 per cent, to 7,324.1, while the broader All Ordinaries finished 18.2 points lower, or 0.24 per cent, to 7,520.7.

  • Eight of the ASX’s 11 official sectors lost ground, led by the consumer staples sector, which slid 1.2 per cent as both supermarket giants’ share prices fell on the back of concerns of a potential rate rise.

    Coles Group dropped 47 cents, or 2.5 per cent, to $18.15, while arch-rival Woolworths Group lost 44 cents, or 1.1 per cent, to $39.07. But on the consumer discretionary side, Domino’s Pizza slid $2.03, or 3.8 per cent, to $50.97.

    Business travel company Corporate Travel Management Limited surged $2.28, or 12 per cent, to $21.18 after it was awarded a $3 billion, two-year contract by the UK Home Office. Corporate Travel Management is having a good 2023; it’s up 43.8 per cent year-to-date.

    In the big banks, ANZ gained 16 cents, or 0.7 per cent, to $23.77, and National Australia Bank added 2 cents to $28.13; but Westpac eased 3 cents to $22.09 and Commonwealth Bank shed $1.01, or 1 per cent, to $98.22. Investment bank Macquarie Group retreated 78 cents, or 0.4 per cent, to $178.82.

    Among the big miners, BHP gave up 44 cents, or 0.9 per cent, to $46.40; Rio Tinto fell 89 cents, or 0.7 per cent, to $120.86; and Fortescue Metals weakened 41 cents, or 1.8 per cent, to $22.14.

    Goldminer Evolution lost 26 cents, or 0.9 per cent, to $29.40, but Northern Star added 10 cents, or 0.7 per cent, to $13.80; and Gold Road Resources strengthened 2.5 cents, or 1.4 per cent, to $1.82.

    In the lithium cohort, producer Allkem eased 10 cents, or 0.9 per cent, to $11.04, while fellow producer Pilbara Minerals firmed 3 cents, or 0.9 per cent, to $3.57. Mineral Resources, which mines iron ore and lithium, gained 61 cents, or 0.8 per cent, to $78.02, and IGO, which produces nickel and lithium, advanced 17 cents, or 1.4 per cent, to $12.75.

    Of the lithium project developers, the standout was Evergreen Lithium, which rocketed 17 cents, or 51 per cent, to 49 cents. In its first three days of trading on the ASX, after being sold through its prospectus at 25 cents, Evergreen is just one cent short of doubling.

    In coal, Whitehaven Coal put on 18 cents, or 2.7 per cent, to $6.91; New Hope Corporation gained 7 cents, or 1.2 per cent, to $5.90; and Yancoal Australia rose 10 cents, or 1.7 per cent, to $5.94; but Stanmore Resources lost 9 cents, or 2.7 per cent, to $3.26.

    Around the oil and gas traps, Woodside Energy rose 36 cents, or 1.1 per cent, to $34.52; Santos gained 3 cents, or 0.4 per cent, to $7.25; and Brazilian-based producer Karoon Energy added 4 cents, or 1.7 per cent, to $2.39.

    Cooling US wholesale inflation welcomed

    In the US, data pointing to cooling US inflation was welcomed by the sharemarket. The 30-stock Dow Jones Industrial Average added 383.19 points, or 1.1 per cent, to 34,029.69, while the broader S&P 500 index gained 54.3 points, or 1.3 per cent, to 4,146.22, for its highest close since February. The tech-laden Nasdaq Composite Index lifted 236.9 points, or 2 per cent, to 12,166.27.

    The March producer price index, a measure of wholesale prices, came down by 0.5 per cent from February, when economists’ consensus expected prices to be flat. Excluding food and energy, the core wholesale prices reading declined 0.1 per cent over the month, much better than the 0.2 per cent increase expected by economists polled by Dow Jones.

    On the bond market, the US 10-year yield was unchanged at 3.449 per cent, while the more policy-sensitive 2-year yield was also flat, at 3.968 per cent.

    Gold eased 10 cents to US$2,040 an ounce, while in oil, the global benchmark Brent crude grade dropped US$1.24, or 1.4 per cent, to US$86.09 a barrel, while US West Texas Intermediate added 13 cents, or 0.2 per cent, to US$82.29 a barrel.

    Prospects of higher Australian interest rates have the Australian dollar buying 67.84 US cents this morning, well up on the 67.01 US cents at the local close on Thursday.

    James Dunn

    James is an experienced senior journalist and host of The Inside Network's industry events.

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