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Weakening share and commodity prices will see the Australian share market open on the back foot this morning, largely due to China data released after market yesterday that fell short of expectations. Increasing the pressure, BHP will likely face further selling after the announcement overnight of an emergency relief fund for those affected by the Brazilian mine disaster. However traders and investors won’t get too carried away ahead of the crucial jobs read late in the morning session.
Industrial production in China grew at 5.6% pa in October, continuing the deceleration faster than the consensus 5.8% forecast. This knocked the wind out of a cautious rally that began late in the Asia Pacific session. Although most European exchanges managed to hang on to gains, a further slump in oil and copper prices pushed US markets into the red.
The increased likelihood of a rate rise in the US has dialled back expectations of a rate cut from the RBA. That could change if today’s employment numbers disappoint for the second month in a row. The focus is the number of jobs created. More than the posited increase of fifteen thousand jobs may see an AUD rally and share buying, whereas a number below zero would deflate both markets.
Frequently Asked Questions about this Article…
Weakening share and commodity prices are causing the Australian share market to open on the back foot, largely due to disappointing China data that fell short of expectations.
China's industrial production grew at 5.6% in October, which was below the expected 5.8% forecast. This led to a cautious rally being knocked back and contributed to a slump in oil and copper prices, affecting global markets.
BHP is likely facing further selling pressure due to the announcement of an emergency relief fund for those affected by the Brazilian mine disaster.
The upcoming jobs report is crucial as it will influence market sentiment. A higher-than-expected increase in jobs could lead to an AUD rally and share buying, while disappointing numbers could deflate both markets.
The increased likelihood of a US rate rise has reduced expectations of a rate cut from the Reserve Bank of Australia. However, this could change if the employment numbers are disappointing for the second consecutive month.
An AUD rally could be triggered if the jobs report shows more than the expected increase of fifteen thousand jobs, boosting investor confidence and share buying.
Most European exchanges managed to hold onto gains despite the data, but a further slump in oil and copper prices pushed US markets into the red.
If the jobs report shows a decrease in employment, it could deflate both the AUD and share markets, as it would indicate weaker economic conditions.
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