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Disappointing US jobs figures sent Wall Street tumbling on Friday, fuelling expectations of further fiscal stimulus by the Obama administration. The Dow Jones industrial average fell 253 points, or 2.2 per cent, to 11,240.26 points on Friday night, wiping out gains for the week.

By ·
5 Sep 2011

Disappointing US jobs figures sent Wall Street tumbling on Friday, fuelling expectations of further fiscal stimulus by the Obama administration. The Dow Jones industrial average fell 253 points, or 2.2 per cent, to 11,240.26 points on Friday night, wiping out gains for the week.

The Standard & Poor's 500 index dropped 30.45 points, or 2.5 per cent, to 1173.97 points while the technology-heavy Nasdaq composite index sank 65.71 points, or 2.6 per cent, to 2480.33 points.

World oil prices slumped on Friday after the United States reported that job creation ground to a halt in August, a stark sign of trouble in the world's largest economy. New York's main contract, West Texas Intermediate (WTI) for delivery in October, dropped $US2.48 to close at $US86.45 a barrel. In London, Brent crude fell $US1.96 to settle at $US112.33 a barrel.

Gold surged nearly three per cent to $US1,881.69 per ounce, hitting its highest level since last week's record, as investors sought refuge in safe haven assets following the US employment report. Spot silver tracked gold to jump 4.65 per cent to $US43.34 an ounce by late afternoon, following a 3.2 per cent drop in the previous week.

China's August PMI number came in at 50.9 through the week while the HSBC PMI came in at 49.9. Between the two results the outcome for the PMI figure was most probably expansionary for August but most importantly it shows us that China's monetary policy is tracking well to contain inflation.

This week in Australia the June quarter GDP will be released on Wednesday. Economists are expecting a return to modest growth following the weather impacted contraction in the March quarter.

Before the release we'll see Australian June quarter company profits and current account, as well as ANZ job ads, the TD Securities monthly inflation gauge, the services and construction PMIs and housing finance. Amidst these numbers, the RBA will make a rate decision on Tuesday. Thursday will also see the Australian trade balance and unemployment data.

Monday is services PMI day across the globe for everyone bar the US, which is on holiday. The eurozone will make its first revision of June quarter GDP on Tuesday and the ECB and BoE will both make rate decisions on Thursday, with no changes expected.

Economic releases in the US this week include the services PMI, the Fed Beige Book, the monthly trade balance and wholesale trade.

Thursday night President Obama will unveil his new policies intended to spark up the US economy, and jobs creation is expected to play a large part.

On Friday, China will provide its monthly “data dump” of producer prices, consumer prices, industrial production, retail sales and trade balance.


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