Australian Stock Market Report
US non-farm payrolls (employment) fell by 54,000 in August, far better than expectations for a 110,000 decline in jobs. Estimates of job losses in June and July were also revised down. Private sector jobs rose by 67,000, ahead of forecasts for a 41,000 lift in jobs. The unemployment rate rose from 9.5pct to 9.6pct.
The US ISM services index eased from 54.3 to 51.5 in August, below expectations for a result near 53.0. But it was still the eighth consecutive month of expansion in the services sector.
European shares rose on Friday as investors were encouraged by better-than-expected US employment data. The FTSEurofirst index rose by 0.8pct to the highest close since early August. The UK FTSE lifted by 1.1pct and the German Dax gained 0.8pct.
US sharemarkets rose on Friday in response to encouraging economic data. The Dow Jones rose by almost 128pts or 1.2pct with the S&P 500 up 1.3pct and the Nasdaq lifted almost 34pts or 1.5pct. Over the week the Dow Jones gained 2.9pct with the S&P 500 up 3.8pct and the Nasdaq was higher by 3.7pct. It was the strongest first week in September for the Dow Jones and S&P 500 in 28 years.
US treasuries fell again on Friday (yields higher) as jobs data eased fears of a double-dip recession. US 2yr yields rose by 2pts to 0.518pct and US 10yr yields rose by 9pts to near 2.71pct. Over the week US 2yr yields fell by 3pts and US 10yr yields rose by 5pts.
The Euro and commodity currencies rose against the greenback in US trade as investors moved away from safe-haven assets. The Euro rose from US$1.2810 to US$1.2900, ending US trade near its highs. The Aussie dollar lifted from US90.65c to US91.75c, ending US trade near the day´s highs. But the Aussie has slipped to US91.40c this morning. And the Japanese yen held between 84.00 yen per US dollar and JPY85.20, ending US trade near JPY84.30. The Japanese yen has strengthened to JPY84.15 this morning.
US crude oil prices eased on Friday. Hurricane Earl was expected to crimp US holiday driving, while a better reading on US jobs matched a softer reading on the services sector. The Nymex crude oil contract fell by US42c or 0.6pct to US$74.60. London Brent crude fell by US26c to US$76.67 a barrel. Over the week Nymex oil fell by 0.8pct.
Base metal prices rose were largely flat on the London Metal Exchange on Friday although zinc lost 1.1pct. Over the week base metal prices rose between 2.5-3.7pct. But the Comex gold price fell by US$2.30 an ounce on Friday to US$1,251.10 in response to end-week profit-taking and reduced demand for safe-haven assets. Gold finished higher for the fifth week, up 1.1pct.
Ahead: In Australia, job advertisements and the monthly inflation gauge are released. The US financial markets are closed for the Labor Day holiday.