Earlier this morning, I said I didn’t think the market would pay too much attention to today’s labour force data. As much as it pains me: I was wrong. The unemployment rate of 4.7% was happily accepted by the market, such that the XJO pared back morning losses to trade flat heading into the final 40 minutes of trade.
The ASX200 traded in the mid-upper 8,600pts through morning, but when the ABS revealed unemployment data was at 4.7% in September – with the underemployment rate climbing above 6% – the market gradually floated to breakeven intraday.
The reason the market liked that news is that an unemployment rate heading towards 5% suggests the RBA may not need to hike interest rates anytime soon.
The central bank has a dual mandate: manage the labour market, and, manage the inflation rate. It’s been doing a lot of inflation-managing, and if September’s labour force data doesn’t prove to be transient, it appears that the economic chemotherapy of rate hikes is working.
That the market is suspecting now there’s less chance of a rate hike this year is hinted at in the Australian bond yields which today fell on the back of the September data release.
The Australia 10Y bond yield plummeted intraday once the data was released, down one tenth of a percent. While the yield remains at 5.2%, it hit an intraday high of 5.36%.
That we didn’t flip green is to do with the materials sector which is on track for a three month low. Copper, lithium and iron ore all fell back overnight; both Rio and BHP clocked losses of more than -4% intraday.
Ongoing tech fears also continue to drag down the XTX with Korea’s KOSPI index the canary in the coalmine (once again) for the gusto of the AI trade; heading into the final half hour the tech index was down more than -4%.
At least Wisetech investors saw some reprieve on Thursday as the former crown jewel revealed ASIC has dropped its investigation into the company on insider trading, and, governance grounds respectively centred around company founder RIchard White.
The best performing sector of the day was Staples – up 3.3% – followed by financials up +2.25% which helped to offset the tanking in the materials sector.
BOQ ended up being a winner of the finance sector with its Q1F27 report widely welcomed by investors, even after home lending dropped significantly.
Unfortunately, a/a 3.30pm AEDT, US futures are red with the NASDAQ set to drop by -1% overnight, though, a lot can change in the space of an evening. Futures for the S&P500 are down four tenths of a percent at the time of writing.
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