Jobs data, China rumours drag on stocks

THE sharemarket ended flat after disappointing jobs data wiped out an early 1 per cent gain flowing from strong performances overseas.

By InvestSMART · 20 Jan 2012

By InvestSMART ·
20 Jan 2012

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THE sharemarket ended flat after disappointing jobs data wiped out an early 1 per cent gain flowing from strong performances overseas.

Brokers said hints of a possible labour shortage in China, Australia's biggest trading partner, and nervousness before a slew of earnings reports from Wall Street also helped to undermine the market.

"We ran out of puff partly due to the jobless figures and some press hints of labour shortages from China," said Ord Minnett stockbroker Jon Hancock.

Official figures yesterday showed Australia's unemployment rate last month was flat at 5.2 per cent, below analysts' forecasts that the job market would add 5000 new positions.

At the close, the benchmark S&P/ASX 200 Index was down

3.1 points at 4214.8.

Financial stocks finished lower after investors turned sour on the sector following a string of profit downgrades from insurers this month. QBE shed 28?, or 2.4 per cent, to $11.20, Suncorp lost 14?, or 1.7 per, to $8.15 and Wesfarmers, which has a big insurance arm, ended down 11?, or 0.4 per cent, at $30.37.

The big four banks largely shrugged off concerns that high funding costs and slower growth were likely to squeeze their margins in 2012.

"We have been in, and still remain, in a slower credit environment for the Aussie banks," said Cameron Securities client adviser Adrian Leppinus.

Westpac was up 3? at $20.60, Commonwealth down 4? at $49.80, NAB 22? stronger at $23.88 and ANZ firmed 3? to $20.82.

Market-beating results from Woodside Petroleum and Santos did little to help the energy sector, which closed down 0.4 per cent. Woodside lost 63?, or 1.9 per cent, to $33.48 despite beating full-year production forecasts, and Santos edged up 4? to close at $13.25.

Beach Energy bucked the trend to close up 3.5?, or

2.6 per cent, at $1.405 after it renegotiated a royalty agreement with Exxon Mobil subsidiary Esso Australia.

The resource sector was one of the few bright points, rising 0.7 per cent after strong production results from several top miners.

BHP Billiton closed up 34?, or 0.9 per cent, at $37.34, Rio Tinto rose 15? to $66.75 and Fortescue Metals moved up 1? to $5.06.

Lynas Corp was one of the strongest performers, closing up 9?, or 8.5 per cent, at $1.15 after Malaysia's Trade and Energy Minister, Mustapa Mohamed, said the country's cabinet would soon decide on granting the company a licence to refine rare earths in Malaysia.

Spot gold closed up $US8.72 at $US1663.37 an ounce.

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Frequently Asked Questions about this Article…

Why did the S&P/ASX 200 end flat despite strong performances overseas?

The ASX 200 ran out of momentum after early gains because disappointing Australian jobs data and press hints of a possible labour shortage in China knocked investor confidence. The unemployment rate was flat at 5.2%, which fell short of expectations for new jobs, and nervousness ahead of a slew of Wall Street earnings also weighed on the market — leaving the benchmark down just 3.1 points at 4214.8.

How did Australia's jobs data affect investor sentiment and share prices?

Australia's unemployment rate came in flat at 5.2%, below forecasts that expected around 5,000 new positions. That weaker-than-expected jobs update wiped out an early roughly 1% gain and contributed to a cautious mood among investors, undermining sectors that had been benefitting from overseas strength.

Why did financial and insurance stocks weaken, and which insurers were hit?

Financial stocks fell after investors reacted to a string of profit downgrades from insurers during the month. Insurers like QBE and Suncorp saw share weakness — QBE fell about 2.4% to $11.20 and Suncorp lost about 1.7% to $8.15 — and related stocks with insurance exposure, such as Wesfarmers, also eased.

Did the big four Australian banks suffer from concerns about funding costs and slower growth?

Not significantly on the day. While analysts noted a slower credit environment and potential margin pressure from higher funding costs and slower growth, the big four largely shrugged off those concerns. Reported prices included Westpac at $20.60, Commonwealth Bank at $49.80, NAB at $23.88 and ANZ at $20.82.

Why didn't strong results from Woodside and Santos lift the energy sector?

Even though Woodside Petroleum and Santos reported market‑beating results, the energy sector still closed down 0.4% overall. Woodside fell 1.9% to $33.48 despite beating full‑year production forecasts, while Santos edged up to close at $13.25 — showing that sector‑wide sentiment and other factors can outweigh company‑level beats.

What drove Beach Energy's share price higher?

Beach Energy's shares rose after the company renegotiated a royalty agreement with Exxon Mobil’s Esso Australia. The stock closed up about 2.6% at $1.405 on the news, demonstrating how contract and royalty changes can move energy stocks.

Which miners and resource stocks led gains, and why did the resource sector perform well?

The resource sector was one of the brighter spots after strong production results from several top miners. BHP Billiton closed up 0.9% at $37.34, Rio Tinto rose to $66.75, Fortescue Metals moved up to $5.06, and Lynas Corp jumped about 8.5% to $1.15 after Malaysian comments that a licence to refine rare earths in Malaysia would soon be decided.

How did gold and commodity prices move on the day?

Spot gold closed higher, up US$8.72 to US$1,663.37 an ounce, reflecting some safe‑haven demand or commodity price dynamics on the day amid mixed market drivers.