Jobs data prompts selloff of high-yield stocks

The sharemarket closed flat, held back by weakness among the banks and expectations of a pause in interest rate cuts after the release of encouraging jobs figures.

The sharemarket closed flat, held back by weakness among the banks and expectations of a pause in interest rate cuts after the release of encouraging jobs figures.

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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