Stocks spring back to life on jobs data

STOCKS snapped a four-day losing streak yesterday as surprisingly good job figures added to improving investor confidence about the state of the global economy.

By InvestSMART · 13 Apr 2012

By InvestSMART ·
13 Apr 2012

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STOCKS snapped a four-day losing streak yesterday as surprisingly good job figures added to improving investor confidence about the state of the global economy.

The S&P/ASX 200 Index posted its best session this month, closing at the day's high of 4280.6, a gain of

34.5 points or 0.8 per cent.

The economy added 44,000 jobs last month, about seven times the number analysts expected. The result prompted investors to pile into the dollar, propelling it almost US1? higher. In late trading it was above the $US1.04 level.

Comments by new Ten Network chief James Warburton that the advertising market was showing signs of reduced volatility helped spark a rally among media stocks.

Ten traded in a 7 per cent range, bouncing off a three-year low to close 2? higher for the day, or 2.6 per cent, at 78?.

APN News & Media fared even better, jumping 4?, or 4.8 per cent, to 87?, while Fairfax Media rose 2?, or

2.8 per cent, to 74.5?.

CMC Markets sales trader Ben Taylor said that while the positive jobs figures helped, many investors remain cautious about the market's prospects. "Given the volatility and the lack of people trading at the moment, I think it's going to take quite a lot before you see mum and dad investors dipping their toes back in the water."

Billionaire Kerry Stokes is one investor dipping in. His Seven Group yesterday revealed it had bought the local arm of US mining parts and services business Bucyrus for $389.39 million. Seven-owned WesTrac, the Caterpillar heavy machinery dealer in New South Wales, the ACT and Western Australia, will take on Bucyrus' business in those states.

Seven shares rallied on the deal, rising 53?, or 5.3 per cent, to $10.34 leading all stocks on the top 200 and closing above $10 for the first time in more than four years.

The big banks all advanced, NAB rising 28? to $24.58, Westpac 15? to $22.05, ANZ 21? to $22.98, and Commonwealth 16? to $49.76.

BHP Billiton ended the day 31? higher at $33.90 while Rio Tinto put on 94? to $64.46.

Minerals sands miner Iluka was steady at $17.27 after its production and revenue fell in the first quarter of 2012.

Laos-focused miner PanAust climbed 16?, or 5.4 per cent, to $3.13, trailing only Seven among the gainers on the ASX 200.

Shares in Flinders Mines were in a trading halt pending the outcome of court action aimed at preventing the iron ore explorer's $554 million takeover by a Russian steel maker. Flinders last traded at 22?.

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Frequently Asked Questions about this Article…

How did the latest jobs data affect the ASX 200 and investor confidence?

Surprisingly strong jobs data — the economy added about 44,000 jobs — helped lift investor confidence and snapped a four‑day losing streak. The S&P/ASX 200 posted its best session this month, closing at 4,280.6, up 34.5 points (around 0.8%).

Why did the Australian dollar rise after the jobs report?

The stronger‑than‑expected jobs numbers prompted investors to pile into the Australian dollar, pushing it about a cent higher. In late trading it was trading above US$1.04.

Which media stocks rallied and what drove the gains?

Media stocks including Ten Network, APN News & Media and Fairfax Media rallied after comments from new Ten chief James Warburton that the advertising market was showing signs of reduced volatility. Ten bounced off a three‑year low and closed higher, while APN and Fairfax also posted solid gains as investors reacted to improving ad‑market sentiment.

What acquisition did Seven Group make and how did that affect its share price?

Seven Group revealed it bought the local arm of US mining parts and services business Bucyrus for about $389.39 million. WesTrac (Seven‑owned) will take on Bucyrus’s business in several states. The deal lifted Seven shares sharply — they rallied about 5.3% to $10.34 and closed above $10 for the first time in more than four years.

How did the big Australian banks perform during the market bounce?

The major banks all advanced on the day, reflecting the broader lift in market sentiment. Reported prices included NAB at $24.58, Westpac at $22.05, ANZ at $22.98 and Commonwealth Bank at $49.76.

What happened with miners and resources stocks on the day?

Large miners rose alongside the broader market — BHP ended the day higher (reported at $33.90) and Rio Tinto also lifted. Smaller resources companies moved in mixed fashion: minerals‑sands miner Iluka was steady at about $17.27 after reporting falls in production and revenue, while Laos‑focused PanAust climbed to roughly $3.13.

Are investors fully confident after the rally, or is there still caution?

Many investors remained cautious despite the bounce. CMC Markets sales trader Ben Taylor noted ongoing volatility and low participation, saying it may take time before everyday "mum and dad" investors feel comfortable re‑entering the market.

What is the situation with Flinders Mines and the takeover bid?

Shares in Flinders Mines were placed in a trading halt pending the outcome of court action intended to block a proposed takeover. The bid in question is reportedly a $554 million takeover offer from a Russian steel maker.