Stocks rebound from early lows
THE sharemarket slipped yesterday after the unemployment rate crept up to 5.4 per cent, its highest since March 2010.
THE sharemarket slipped yesterday after the unemployment rate crept up to 5.4 per cent, its highest since March 2010.The benchmark S&P/ASX 200 Index fell 7.2 points to 4483.5.Material stocks led the losses, falling 0.9 per cent, while information technology also fell 0.9 per cent. The energy sector lost 0.2 per cent and consumer staples dipped 0.3 per cent.Telecommunications performed well, up 0.5 per cent, while health jumped 0.4 per cent and financials rose 0.2 per cent.The market lost ground from the opening bell after negative leads from Europe and the US. But investors staged a fightback after the release of employment data.Figures from the Bureau of Statistics showed unemployment climbed last month from 5.1 per cent to 5.4 per cent, with economists saying the data was better than expected.The number of people employed grew by 14,000, so the rise in "unemployment" had more to do with the way it is measured. The official jobless figure increased because more people started looking for work, so they swelled the ranks of the officially unemployed."At 5.4 per cent, we believe the unemployment rate is now more in line with the reality of a softer labour market," said TD Securities Asia-Pacific Macro Strategist, Alvin Pontoh. "[But] the market reaction was a surprise to us, and suggests investors prefer the 'glass half-full' approach. He predicted a reversal in market moves in the coming days or weeks.The dollar strengthened on the news, jumping half a US cent. Late yesterday, the currency was trading at US102.72?, up from US102.21? on Wednesday.RBC senior economist Su-Lin Ong said the Aussie had been rising since the release of the numbers."We've been moving higher since we got the labour market data the currency's about a good half a US cent higher since we got the numbers," she said."The market took the headline employment numbers as a positive and in line with expectations."In the resource sector, BHP Billiton fell 23? to $33.25 and Rio Tinto lost 41? to $55.42.Iluka fell 64?, or 6.6 per cent, to $9 after the mineral sands miner posted a 58 per cent fall in third-quarter sales revenue due to lower production and demand.Rare-earths miner Lynas plunged 13?, or 15 per cent, to 73? after a Malaysian court delayed the start of production at its plant to consider an application by opponents.In the banking sector, National Australia Bank rose 5? to $26.25, ANZ was up 5? at $25.61, Commonwealth Bank climbed 9? to $56.74, and Westpac rose 8? to $25.80.