Jobs surprise puts Europe on back burner

The S&P/ASX 200 closed higher, gaining 20.5 points (0.48%) to 4,295.6 after data showed an unexpected rise in employment. The positive jobs news helped investors shrug off worries about Europe’s financial system, although financial stocks still weighed on the benchmark index.

The report showed 15,500 new jobs were created last month versus a predicted fall of 5,000, and the unemployment rate dropped to 4.9% (economists had expected 5.3%). For investors, stronger-than-expected jobs data can alter interest-rate expectations, boost confidence in consumer demand, and influence stock sector performance.

The Reserve Bank had surprised markets last week with a 50-basis-point cash-rate cut. Economists had been looking for another cut, but the stronger jobs print made a June cut less certain. NAB chief economist Rob Henderson said the good jobs data means the RBA can comfortably ‘sit on their hands’ in June after the May cut.

Financial stocks weighed on the market. ANZ fell to $22.15 after going ex-dividend, National Australia Bank slipped to $24.57 despite a record six-month profit of $2.83 billion (analysts suggested its core banking business showed pressure), while Commonwealth Bank and Westpac edged higher to $51.90 and $22.90 respectively. Analysts also noted market expectations that big banks may cut dividend payouts this season.

Resource stocks rose on improved sentiment: Rio Tinto traded around $61.94 after its chairman said he feels more confident about the global economic picture than six months ago, and BHP Billiton rose to $34.62. Positive commentary from company leadership and broader market mood helped lift these stocks.

News Corp shares rose after a 47% increase in third-quarter net profit, with the ordinary and non-voting lines advancing to around $20.16 and $19.96 respectively. However, the company warned advertising markets were soft in Australia and the UK, which could make the final three months of the financial year tougher for its newspapers.

Leighton Holdings was awarded about $800 million in gas and water infrastructure contracts in Queensland. The contract news pushed its shares higher to around $19.35, reflecting investor interest in new large-scale contract wins.

The article notes worrying signs from Europe — Spain’s stock market hit an eight‑year low on concerns its banks were underfunded — but domestic Australian jobs strength helped investors largely ignore those concerns on the day. It’s a reminder that global banking stress can affect sentiment, even if local data temporarily offsets those worries.