The Australian sharemarket and dollar recovery rallies ran head-first into poor domestic jobs data that cast a dark cloud over the bullish outlook.
The S&P/ASX 200 index rallied 0.4 per cent in early trade but promptly reversed to close two points, or 0.04 per cent, down at 5308.1 after the unemployment rate climbed above 6 per cent to the highest level in 11 years.
Instead of creating 15,000 new jobs as forecast in January the economy shed a net 3700 jobs, 7000 full time jobs, derailing the consensus view the economy was gaining momentum.
“Overall, a poor start to 2014 and while some may argue that employment is a lagging indicator, we would also suggest this print will be a negative for household income, sentiment and thus spending,” Westpac economist Justin smirk said.
The Australian dollar plunged US1¢ from its overnight high to US89.40¢ and government 10-year yields dropped 4.7 points to 4.174 per cent as rate hike fears were extinguished.
Overnight on Wall Street the S&P 500 index closed marginally lower as US Federal Reserve chairman Janet Yellen’s commitment to policy continuity and tapering bond purchases returned a sober outlook to the market.
The Shanghai composite index was marginally firmer at the close of the ASX as doubts over the surge in January exports lingered and investors awaited key lending data.
In Tokyo the Nikkei index fell 1.6 per cent.
Overnight metal prices continued to hold firm, led by gold, but Barclays analysts said “weakening in leading demand indicators implies a softening in the short-term outlook for base metals demand growth”, despite record Chinese copper imports.
“Nevertheless, we think macro worries will be a headwind for prices through the early part of 2014,” they said.
Gold climbed $US7 to a fresh high of $US1295 an ounce before slipping to $US1290 an ounce, while copper pared its overnight gain in Asia, sliding 0.5 per cent to $US7125 a tonne. Spot iron ore bounced $US1 to $US121 a tonne.
Lonsec senior client adviser Michael Heffernan said Telstra’s half year profit report was a standout. Telstra shares gained four cents to $5.15 after it increased its dividend for the first time in eight years and lifted its profit by nearly 10 per cent.
However shares in most of the big banks eased after getting a boost from Commonwealth Bank’s record half year profit and dividend announcement yesterday.
“I think the market is just having a bit of a rest today,” Mr Heffernan said.
Although unemployment was likely to rise in coming months, the economy was improving, largely driven by the housing sector, Mr Heffernan said.
Among the major banks, Commonwealth Bank dipped 45 cents to $75.75, National Australia Bank reversed 14 cents to $34.01, Westpac weakened six cents to $32.44, but ANZ nudged one cent higher to $30.99.
Mining giant Rio Tinto was off 27 cents at $67.83 ahead of its late afternoon full year results release. BHP Billiton added 12 cents to at $37.32.
The broader All Ordinaries index was down 1.1 points, or 0.02 per cent, at 5318.7 points.
The March share price index futures contract was steady at 5263 points, with 23,854 contracts traded.
National turnover was 1.99 billion securities worth $4.68 billion.