Australian Stock Market Report 05/09/2011
US non-farm payrolls rose by a much larger than expected 244,000 in April - marking the biggest increase in 11 months. The private sector created 268,000 jobs, with jobs growth in the retail sector (+57,000) marking the largest monthly increase in over a decade. However the jobless rate did rise from 8.8pct to 9.0pct in April.
US consumer credit rose by a larger than expected $6.02 billion in March - the sixth straight monthly increase. Revolving credit rose by $1.95 billion in March, while non-revolving credit rose by $4.07 billion.
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European shares reversed early losses on Friday following the upbeat US jobs data. Commodity stocks were in demand after the recent sell-off. The STOXX Europe 600 basic resources index gained 2.9pct. A German news outlet reported that Greece was considering leaving the Euro zone. The statement was later denied by Greek officials. The FTSEurofirst index gained 1.1pct while the German Dax rose 1.6pct and the UK FTSE rose 1pct.
US sharemarkets rallied on Friday in response to the better than expected payrolls figures. The industrials sector - which may benefit from the weaker oil price - was the best performer up 0.8pct.
The CBOE volatility index rose 1.1pct to its highest level since late March. The Dow Jones index rose by 55pts or 0.4pct with the S&P 500 higher by 0.4pct and the Nasdaq was up by 13pts or 0.5pct. For the week the Dow lost 1.3pct, the S&P fell 1.7pct and the Nasdaq gave back 1.6pct.
US treasuries rose slightly (yields lower) on Friday after a report that Greece would leave the Euro zone prompted short covering. US 2yr yields fell by 2pts to 0.553pct and US 10yr yields fell by 1pt to 3.148pct. Over the week US 2yr yields fell by 6pts and US 10yr yields fell by 14pts.
The US dollar rallied against the Euro on Friday following speculation Greece may leave the euro zone. The Euro fell from highs US$1.4585 to US$1.4305, ending US trade near its lows. The Aussie dollar rallied from lows near US106.30c to around US107.90c before ending US trade near US106.90c. And the Japanese yen traded between 80.20 yen per US dollar to JPY80.85, before closing US trade at JPY80.60.
US and European crude oil prices fell on Friday continuing the recent sell-off on heavy volumes. The Nymex crude oil contract fell by US$2.63 or 2.6pct to US$97.18 a barrel. London Brent crude fell by US$1.67 to US$109.13 a barrel. For the week Nymex crude lost 14.7pct.
Base metal prices were mostly higher on the London Metal Exchange on Friday, as investor risk appetite improved. However gains were capped by the stronger US dollar. And the gold price managed to recover after recent losses. Comex gold futures rose by US$10.20 an ounce or 0.7pct to US$1,491.60.
Ahead: In Australia, ANZ job ads are released. In the US, no economic data is slated for release.
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