CMC Markets Weekly Report
The U.S. sharemarket closed at record highs on Friday despite weaker than expected U.S. jobs report. The Dow Jones Industrial Average gained 30.34 points, or 0.19 per cent, to finish Friday at 15,658.36. The broad-market S&P 500 advanced 2.80 points, or 0.16 per cent, to 1,709.67. Both the Dow and S&P set all-time closing records. And the tech-rich Nasdaq Composite rose a solid 13.84 points, or 0.38 per cent, to 3,689.59.
The U.S. sharemarket closed at record highs on Friday despite weaker than expected U.S. jobs report. The Dow Jones Industrial Average gained 30.34 points, or 0.19 per cent, to finish Friday at 15,658.36. The broad-market S&P 500 advanced 2.80 points, or 0.16 per cent, to 1,709.67. Both the Dow and S&P set all-time closing records. And the tech-rich Nasdaq Composite rose a solid 13.84 points, or 0.38 per cent, to 3,689.59.
The U.S. Labor Department said the United States added 162,000 jobs in July, well below the 175,000 expected on average by analysts. The unemployment rate fell to 7.4 per cent from 7.6 per cent in June.
In commodity markets, Crude oil prices slid with a weaker-than-expected jobs report in the United States casting a cloud over demand in the world's biggest oil consumer. New York's main futures contract, West Texas Intermediate for September delivery, closed on Friday at $US106.94 a barrel, down 95 cents. In London trade, Brent North Sea crude for delivery in September fell 59 cents to finish at $US108.95 a barrel.
Gold futures have settled almost unchanged after a weaker-than-expected U.S. labour market reading soothed worries of an impending end to the Federal Reserve's stimulus measures. The most actively traded contract, for December delivery, on Friday settled 70 US cents, or 0.1 per cent, lower at $US1,310.50 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold futures end the week higher.
London Metal Exchange (LME) copper closed near-flat as a weaker-than-expected jobs report from the U.S. dampened hopes for demand that had been stoked by good manufacturing data, but losses were limited amid hopes for further economic stimulus. At the close of open-outcry trading on the LME on Friday, copper was very slightly higher on the day, up 0.1 per cent at $US7,005 a metric ton.
The Australian dollar is slightly higher after U.S. stocks made small gains on Friday. Early this morning, the local unit was trading at 89.21 US cents, up from 89.07 cents on Friday.
There is a bank holiday in NSW which implies a non-settlement day for equities today.
In economic news, Australian Bureau of Statistics (ABS) releases June's retail trade figures today.
Tomorrow the RBA's decision on interest rates is released with most traders expecting a 25bp cut to 2.50 per cent.
The Australian Industry Group/Commonwealth Bank is scheduled to release the Australian Performance of Services Index (PSI) for July, while Dun and Bradstreet puts out its business expectations survey. Meanwhile, the TD Securities/Melbourne Institute inflation gauge for July also is due out.
Investors will also look to employment figures due out on Thursday and earning figures set to be released over Wednesday and Thursday.
In the U.S. the ISM services gauge is released followed by Trade Balances on Tuesday and Consumer Credit on Wednesday.
Frequently Asked Questions about this Article…
The U.S. sharemarket set all-time closing records for the Dow and S&P after investors interpreted the weaker July jobs report—162,000 jobs added versus the 175,000 expected—as easing pressure on the Federal Reserve to tighten policy. Stocks rose modestly: the Dow finished at 15,658.36, the S&P 500 at 1,709.67 and the Nasdaq at 3,689.59.
The U.S. added 162,000 jobs in July, below the consensus 175,000, while the unemployment rate fell to 7.4% from 7.6% in June. For investors, softer payrolls can reduce near-term expectations for Fed tightening, supporting equities but also raising questions about demand-sensitive sectors like oil and industrial commodities.
Oil fell on concerns weaker U.S. jobs imply lower demand: WTI for September closed at US$106.94 a barrel (down US$0.95) and Brent at US$108.95 (down US$0.59). Gold was nearly unchanged for the day—December gold settled at US$1,310.50 an ounce (down US$0.70) but ended the week higher. LME copper was flat-to-slightly up, closing near US$7,005 a metric ton (up about 0.1%).
The report notes most traders are expecting the Reserve Bank of Australia to cut the cash rate by 25 basis points to 2.50%. Investors should watch the RBA statement for guidance on economic growth and inflation, as a cut can influence Australian interest-rate sensitive assets, bank stocks and the Australian dollar.
The Australian dollar was slightly higher after U.S. stocks made gains, trading around 89.21 US cents, up from 89.07 cents. The move reflects a mix of stronger global risk sentiment and market reactions to U.S. economic data.
Investors should watch the Australian Bureau of Statistics release of June retail trade, the Australian Performance of Services Index (PSI) from Ai Group/Commonwealth Bank, Dun & Bradstreet's business expectations survey, and the TD Securities/Melbourne Institute inflation gauge for July. Employment figures and company earnings due midweek are also important.
The bank holiday in New South Wales is a non-settlement day for equities, meaning normal settlement and some market back-office activity will be paused locally. Traders should account for the non-settlement day when scheduling trades or expecting settlements tied to NSW banking services.
U.S. data to watch this week include the ISM services gauge, trade balances on Tuesday and consumer credit on Wednesday. These reports can affect market sentiment, the dollar and interest rate expectations, so everyday investors should track them alongside company earnings and domestic data.
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