Jobless rate fails to frighten off investors

THE fear that kept investors clear of the market only two days ago seemed to disappear yesterday, despite a rise in unemployment, as market-watchers thought it increasingly unlikely Greece would soon default on its debt.

By InvestSMART · 9 Mar 2012

By InvestSMART ·
9 Mar 2012

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The benchmark S&P/ASX 200 Index was up 27.3 points, or 0.66 per cent, at 4171.

Unemployment crept up to 5.2 per cent last month, from 5.1 per cent in January, according to figures from the Bureau of Statistics.

No new full-time jobs were created during the month, but 15,400 part-time jobs were lost.

The rise in unemployment largely met expectations, and investors took the news in their stride, particularly after the US jobs market added 216,000 private sector jobs last month.

That figure helped the US sharemarket close 0.7 per cent higher, which fed through to the local market yesterday morning, helping it bounce back from three consecutive days of losses.

But economists said the rise in Australian unemployment helped to mask a fairly big shift in the labour market.

"The [figure is] very unusual, because the national jobs market has been generally flat over the year," Commonwealth Bank senior economist Michael Workman said.

"Again, it's the mining versus the 'other states' divide. The full-time jobs trend is really in line with this pattern that people expected to see, where the resource states are likely to continue to have a net job gain and the states highly exposed to the high currency, where manufacturing sits, get the job losses."

Energy and materials stocks performed strongest on a day when eight out of 12 industry sectors made gains.

Oil and gas major Santos was the top performer among the ASX 50 companies, with a 54?, or 4 per cent, rise to $14.14.

Fortescue Metals Group was the next best, rising 20?, or 3.8 per cent, to $5.51, while market heavyweight BHP Billiton gained 25? to $34.30, and rival Rio Tinto added 24? to $62.66. The big banks all made gains. National Australia Bank rose 31?, or 1.3 per cent, to $23.38, CBA climbed 38? to $48.04, Westpac was up 11? at $20.41 and ANZ gained 4? to $21.79.

The price of brent crude finished up slightly, at $US124.21 a barrel, continuing its recent upward trend. In a little more than six weeks, the price has increased 13 per cent.

The head of fixed income at Tyndall Investments, Roger Bridges, said the price was being driven by stronger demand for oil, and problems with supply, particularly in the Strait of Hormuz. With AAP

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Frequently Asked Questions about this Article…

Why did the ASX 200 bounce back even though Australia's unemployment rate rose?

Investors looked past the small rise in the jobless rate because the unemployment result largely met expectations and other market drivers were more positive. Easing fears about a possible Greek default and a stronger US jobs report helped global sentiment, and the S&P/ASX 200 rose 27.3 points (about 0.66%) to 4,171.

How did the latest Australian jobs figures affect everyday investors?

The unemployment rate climbed to 5.2% from 5.1%, with no new full‑time jobs and a loss of 15,400 part‑time roles. Because the figures broadly matched forecasts and were accompanied by upbeat international cues, investors largely took the news in stride rather than selling off the market.

Which sectors led the market gains on the day described in the article?

Energy and materials stocks were the strongest performers, with eight of 12 industry sectors making gains. Resource and mining names in particular helped lift the market.

What happened to major mining and oil & gas companies on the ASX?

Several large resource companies rose in price. Oil and gas major Santos was the top performer and rose to $14.14. Fortescue Metals Group climbed to $5.51, BHP Billiton reached $34.30, and Rio Tinto moved to $62.66.

How did the big Australian banks perform during the market rebound?

The major banks all made gains. National Australia Bank rose to $23.38, Commonwealth Bank of Australia climbed to $48.04, Westpac traded up at $20.41, and ANZ increased to $21.79.

What overseas factors helped support the Australian sharemarket that day?

A stronger US labour market—216,000 private sector jobs added—helped the US sharemarket close about 0.7% higher, which fed through to local markets. Investor concern over a near‑term Greek default also eased, reducing risk‑off pressure.

Why were oil prices rising and how did that affect markets?

Brent crude finished at about US$124.21 a barrel, up roughly 13% in a little more than six weeks. Tyndall Investments' head of fixed income, Roger Bridges, said the rise was driven by stronger demand and supply problems, notably tensions affecting the Strait of Hormuz—factors that tend to support energy stocks.

What practical takeaway should everyday investors have from this market update?

Short‑term market moves can be driven by global headlines (like US jobs or European debt concerns) as well as sector dynamics (resource states versus others). A single rise in the unemployment rate that meets expectations may not derail markets if other signals are positive, and different sectors can react very differently—energy and materials outperformed on this occasion.