Weak jobs data wipes out early gains

THE sharemarket closed flat yesterday after disappointing employment data prompted a sell-off ahead of economic news from China and the US.

By InvestSMART · 9 Sep 2011

By InvestSMART ·
9 Sep 2011

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THE sharemarket closed flat yesterday after disappointing employment data prompted a sell-off ahead of economic news from China and the US.

The benchmark S&P/ASX200 index added 4.6 points, or 0.11 per cent, to 4188, while the broader All Ordinaries index rose 6.9 points, or 0.16 per cent, to 4269.8.

The market opened 0.7 per cent higher as investors took their cues from a positive finish on Wall Street and a cautiously positive assessment on the US economy from the Federal Reserve.

The local bourse held on to those gains through the morning but investors sold out of stocks when the latest labour force report showed the unemployment rate rose to a 10-month high of 5.3 per cent in August.

The Bureau of Statistics said the economy lost 9700 jobs during the month. "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 strategist Michael McCarthy said low trading volumes demonstrated a lack of conviction in the market after a combination of positive GDP figures released on Wednesday and yesterday's weak unemployment data.

Energy stocks gained ground after oil prices rose during offshore trading. The sector was up 0.81 per cent, led by Oil Search, which rose 12? to $6.14. Fellow oil and gas producer Santos advanced 6? to $11.56.

The strongest stock in the top 50 was Leighton, which ended the day up 53? at $19.13.

The industrial sector made modest gains, as did typically defensive sectors utilities and health care. Financials lost some ground.

BHP Billiton eased 6? to $38.17 and rival Rio Tinto was up 70? at $71.30. Atlas Iron was down 4? at $3.70 after it declared as unconditional its all-scrip $240 million takeover offer for fellow iron ore miner FerrAus. FerrAus slipped 1? to 92?.

The spot price of gold in Sydney was $US1841.79 per ounce, down $US3.04.

Preliminary national turnover was 2.36 billion securities changing hands for $5.04 billion.

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Frequently Asked Questions about this Article…

Why did the ASX close flat despite early gains?

The article says the market opened about 0.7% higher after a positive Wall Street finish and a cautious Federal Reserve assessment, but weak Australian employment data wiped out those gains. The unemployment rate rose to 5.3% in August and the economy lost 9,700 jobs, prompting selling and leaving the S&P/ASX200 essentially flat at 4,188.

How did the August unemployment report affect investor sentiment and trading volume?

Investors sold after the labour force report showed the unemployment rate rose to a 10-month high of 5.3% and 9,700 jobs were lost. The article notes low trading volumes and said that demonstrated a lack of conviction in the market after mixed GDP and jobs news.

Which sectors performed well and which underperformed on the day?

Energy stocks gained ground (the sector was up 0.81%), led by Oil Search and Santos. Industrial stocks made modest gains, and typically defensive sectors such as utilities and health care also rose. Financials lost some ground.

What happened to major resources stocks like BHP Billiton and Rio Tinto?

According to the article, BHP Billiton eased to $38.17 while rival Rio Tinto was trading at $71.30 during the session — reflecting mixed moves among big miners on the day.

How did Oil Search and Santos react to commodity price moves?

The article reports oil prices rose during offshore trading and energy stocks benefited. Oil Search rose to $6.14 and Santos advanced to $11.56 as part of the sector’s gains.

What takeover activity was mentioned and how did it affect the stocks involved?

Atlas Iron declared its all-scrip $240 million takeover offer for fellow iron ore miner FerrAus unconditional. Atlas Iron fell to $3.70 after the announcement, while FerrAus slipped in response.

What were the reported gold price and market turnover figures?

The article lists the spot price of gold in Sydney at US$1,841.79 per ounce, down US$3.04. Preliminary national turnover was 2.36 billion securities changing hands for $5.04 billion.

What are the key takeaways for everyday investors from this market update?

The article highlights that macro releases — especially employment data — can quickly reverse early gains, commodity price moves (oil, gold) influence energy and resources stocks, takeover announcements can move smaller miners, and low trading volumes may signal weak market conviction. Everyday investors should watch economic data, commodity trends and company-specific news that can drive short-term market moves.