Jobs data prompts selloff of high-yield stocks
The unemployment rate fell to 5.5 per cent in April, with the total number of people with jobs rising by 50,100, Australian Bureau of Statistics figures showed.
CMC Markets chief market strategist Michael McCarthy said there had been an "ambiguous" interpretation of the jobs data, which had led to a selloff of some stocks.
"There are concerns this strength in employment means more rate cuts will be deferred for at least a few months, and that's seen some selling, particularly in those high-yielding stocks," he said. "We have gotten into the grip of rate-cut mania, and those employment numbers provided a bit of a check on that."
Mr McCarthy said the banking sector had also been dragged back by ANZ going ex-dividend and a fall in National Australia Bank after some concern about the quality of its earnings. Mr McCarthy said NAB, like some of the other big banks, was growing profitability but underlying growth in loans was weak.
NAB on Thursday reported its half-year net profit grew by 23 per cent to $2.52 billion. NAB's cash profit, the bank's preferred measure of underlying performance, was up 3 per cent to $2.92 billion. But NAB shares fell 69¢, or 2.1 per cent, to $32.68. Among the other banks, ANZ lost 87¢, or 2.8 per cent, to $30.59, Westpac rose 40¢ to $33.35, and Commonwealth Bank dropped 19¢ to $71.04.
BHP Billiton improved 24¢ to $34.54 but Rio Tinto fell 70¢ to $58.20. Oil and gas producer Santos found 18¢ at $12.83 as it flagged it could return cash through a dividend as the completion of key projects in Queensland and Papua New Guinea remain on target.
News Corp was 90¢ higher at $32.47 after its profit in the past quarter tripled to $US2.85 billion ($2.81 billion), boosted by a one-time gain from its German satellite TV operations, and improvements in cable TV and film operations.
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The article says the sharemarket closed flat after encouraging jobs figures. The Australian Bureau of Statistics reported the unemployment rate fell to 5.5% in April and employment rose by 50,100. That stronger jobs data led to an "ambiguous" interpretation and prompted some selling, especially in higher-yielding stocks, because investors worried it could delay expected interest rate cuts.
According to the article, the stronger employment numbers raised concerns that rate cuts might be deferred for several months. With fewer near-term rate cuts anticipated, the attraction of high-yield (dividend-paying) stocks was reduced, prompting some investors to sell those positions.
The banking sector was hit partly because ANZ went ex-dividend and National Australia Bank (NAB) fell after some market concern about the quality of its earnings. The article also notes that, while NAB and other big banks are growing profitability, underlying loan growth remains weak — a factor that weighed on bank shares.
NAB reported half-year net profit up 23% to $2.52 billion, and its preferred cash profit rose 3% to $2.92 billion. Despite those gains, NAB shares fell 69 cents (about 2.1%) to $32.68, according to the article.
The article reports ANZ fell 87 cents (2.8%) to $30.59 after going ex-dividend, Westpac rose 40 cents to $33.35, and Commonwealth Bank dropped 19 cents to $71.04.
BHP Billiton improved 24 cents to $34.54, while Rio Tinto fell 70 cents to $58.20, as reported in the article.
Santos was up 18 cents to $12.83 and flagged it could return cash through a dividend. The company said key projects in Queensland and Papua New Guinea remain on target, supporting the prospect of returning cash to shareholders.
News Corp rose 90 cents to $32.47 after reporting quarterly profit that tripled to US$2.85 billion (about $2.81 billion). The article attributes the surge to a one‑time gain from its German satellite TV operations and improvements in its cable TV and film businesses.
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