ASX closes lower on weak jobs data
The Australian sharemarket followed offshore markets lower today after iron ore prices tumbled and ABS data showed the economy lost jobs lost month.
Following the 0.4 per cent loss on Wall Street last night the S&P/ASX 200 index dropped 25.2 points, or 0.46 per cent, to5428.8 but finished off the day's lows on some bargain hunting.
The Australian economy shed 4800 jobs in May, while April's increase of 14,200 was revised down to10.300, but the unemployment rate remained steady at 5.8 per cent as the participation rate declined to 64.6 per cent.
"The forward looking indicators continue to point to an on ongoing sound if rather lacklustre labour market," Westpac economist Justin Smirk said. "As such, within the month to month volatility of the survey an average again of around 10,000 to 15,000 per month is still the most likely outcome over the next few months."
The Australian dollar hit an overnight high of US94.10¢ but dropped back to US93.70¢ as offshore sentiment soured.
European equities surrendered gains after earnings downgrades from German airliner Lufthansa and French pipe-making multinational Vallourec, while the cancellation of orders for 70 airbus aircraft worth $US5 billion by Emirates compounded the negative sentiment.
National Australia Bank global head of currency strategy Ray Attrill said the "risk-off" sentiment was driven by numerous factors, including the resurgence of al-Queda militants in Iraq and World Bank growth downgrades.
"Also worth noting is a sharp warning from the IMF, saying the world must act to contain risk of another devastating housing crash," he said. "It claims acceleration in global house prices from already high levels is a major threat to economic stability. The IMF cites prices as being well above historical averages for a majority of countries in relation to both incomes and rents, and that while the tools for containing housing market booms were still being developed, 'this should not be excuse form inaction'."
The Shanghai composite index was slightly weaker at the close of the ASX despite officials announcing new steps aimed at bolstering slowing economic growth by cutting taxes and expanding financing for exporters.
In Tokyo the Nikkei index lost 0.7 per cent.
Dalian iron ore futures tumbled 2 per cent today while spot iron ore eased to $US93.50 a tonne yesterday, while copper rose 0.2 per cent to $US6690 a tonne and gold slipped $US2 to $US1260 a tonne.
More to come…
