Market flat: 'caught between the numbers'

THE Australian sharemarket closed flat after disappointing jobs data prompted a selloff before economic news from China and the US. The benchmark S&P/ASX200 Index closed up 4.6 points, or 0.11 per cent, at 4188.

By InvestSMART · 9 Sep 2011

By InvestSMART ·
9 Sep 2011

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The Australian market opened 0.7 per cent higher as investors took their cues from a positive finish on Wall Street and a cautiously upbeat assessment on the US economy from the Federal Reserve. The market held on to those gains through the morning but investors sold out of stocks late morning when the latest labour force report showed the unemployment rate rose to a 10-month high of 5.3 per cent in August.

The Australian Bureau of Statistics showed the economy lost 9700 jobs last month, which pushed up the unemployment rate.

"People thought the jobless rate would stay stable at 5.1 per cent," RBS Morgans private client adviser Craig Walker said.

"So that news was probably a little disappointing."

CMC Markets chief market strategist Michael McCarthy said below-average trading volumes demonstrated a lack of conviction in the market after a combination of positive GDP figures on Wednesday and disappointing unemployment data yesterday.

"With the global news that's been driving (the) selling of markets abating a little overnight, we've been left to our own devices and essentially we've been caught between the numbers," he said.

Local players poured into energy stocks yesterday after oil prices rose during offshore trading.

The sector was up 0.81 per cent according to Iress data, led by Oil Search, which climbed 1.99 per cent, or 12?, to $6.14.

Fellow oil and gas producer Santos advanced 6? to $11.56. The strongest stock in the top 50 was Leighton Holdings, which ended the day 53?, or 2.9 per cent, higher at $19.13.

The industrial sector was 0.45 per cent firmer, and typically defensive sectors utilities and health care, were also stronger.

Financials ended the day 0.03 per cent lower.

BHP Billiton was down 6? at $38.17 and fellow mining giant Rio Tinto rose 70? to $71.30.

Iron ore miner Atlas Iron was down 4? at $3.70 after it declared its all-scrip $240 million takeover offer for fellow iron ore miner FerrAus Ltd unconditional. FerrAus was down one cent at 92?.

The spot price of gold in Sydney was $US1841.79 per fine ounce, down $US3.04 from Wednesday's local close at $US1838.75.

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Frequently Asked Questions about this Article…

What happened to the Australian sharemarket (ASX 200) in the latest session?

The Australian sharemarket finished essentially flat. The S&P/ASX200 closed up 4.6 points (about 0.11%) at 4,188 after opening roughly 0.7% higher on a positive Wall Street lead, but late selling following disappointing jobs data trimmed gains.

How did recent jobs data and the unemployment rate affect investor sentiment?

Investors sold out of positions after Australian Bureau of Statistics figures showed the economy lost 9,700 jobs and the unemployment rate rose to 5.3% (a 10‑month high). The surprise uptick from an expected 5.1% added disappointment and weighed on market conviction.

Why were energy stocks stronger and which oil and gas companies moved?

Energy stocks rallied after offshore oil prices rose. The energy sector was up (about 0.81% per Iress data), led by gains in oil and gas names — Oil Search climbed to about $6.14 and Santos moved higher to about $11.56 during the session.

Which sectors outperformed and how did major miners and financials fare?

Industrial stocks were firmer (around 0.45%), and typically defensive sectors such as utilities and health care were also stronger. Financials were effectively flat to slightly weaker. Among miners, BHP Billiton slipped to roughly $38.17 while Rio Tinto rose to about $71.30.

What did market strategists say about trading volumes and the market’s direction?

Analysts noted below‑average trading volumes, signalling a lack of conviction after mixed domestic and global data. CMC Markets’ Michael McCarthy described the market as being 'caught between the numbers' — positive GDP on one hand and disappointing unemployment on the other.

Were there any notable company-specific moves investors should know about?

Yes. Leighton Holdings was the strongest stock in the top 50, finishing about 2.9% higher at $19.13. Atlas Iron fell to around $3.70 after declaring an all‑scrip takeover offer for FerrAus, while FerrAus slipped by roughly one cent to about $0.92.

How do international factors like the US Federal Reserve and Wall Street affect the ASX?

The ASX responds to international cues: a positive finish on Wall Street and a cautiously upbeat assessment of the US economy from the Federal Reserve helped the market open higher. Investors also monitor economic news from China and the US for guidance on risk appetite.

What was the reported gold spot price and should everyday investors pay attention?

The article reported the Sydney spot price of gold at about US$1,841.79 per fine ounce. Everyday investors often watch gold as a market hedge or safe‑haven asset, especially when equity markets show mixed signals from economic data.