The market is down 65. The SFE Futures were down 58 this morning. As we write the Dow Futures are down another 105 points.

Dow Jones closed down 275 — down 286 at worst on disappointing job numbers. Worst day this year. Dow 10% off April highs. Employment numbers fell short of expectations with only 69,000 new jobs in May (versus Est of +150,000) and last months numbers were also revised down by 50,000 jobs. US unemployment now at 8.2% up from 8.1% raising the suggestion that the US economic recovery has now peaked — added to weak Chinese PMI numbers last week and the concept of a global economic slowdown is beginning to take hold. Gold was up 3.70%. On the last two occasions the Fed announced a quantitative easing package (which is inflationary) gold surged. Metals were down on the LME except Zinc. Aussie dollar down buying $96.97.

Main points:

  • 27 points of the market fall are thanks to BHP and the banks.
  • TD Securities — Melbourne Institute monthly Inflation Gauge which up 1.8%, relatively soft in May compared with April. This is the third consecutive month the rate of inflation has been below the RBA target range of between 2%-3%. The weak inflation data gives the RBA plenty of room for a rate cut tomorrow.
  • RBA meeting this week with talk of a 50bp rate cut. GDP numbers on Wednesday — expecting +0.5%. Jobs numbers on Thursday. Westpac’s economist making headlines last week with suggestions that rates will be 2.75% by the end of the year.
  • Brambles (BXB) announced plans to raise $448m by raising new shares via a pro rata entitlement offer. The offer is a fully underwritten 1:20 accelerated renounceable entitlement offer with retail rights trading. Shares offered at a price of 605c representing 10.9% discount to the pre-bid price.
  • Seek (SEK) has launched a subordinated notes offer to raise $125m to be used to repay part of the company’s existing debt facility.
  • Fortescue Metals Group (FMG) are forecasting an iron ore price of US$110 a tonne in their projections. Below the current price of $135/ton.
  • Brickworks (BKW) is believed to be against a proposal to unravel their cross shareholding with Washington H Soul Pattinson (SOL) due to the costs involved and because it may not be in the company’s best interests.
  • ANZ released the Job Advertisements Survey which reported a fall of 2.4% in May compared to a 0.8% drop in April. Trends are showing a softening in labour demand. They fell for the second consecutive month and demand for labour fell even in the mining boom states.
  • The Australian Bureau of Statistics released the Business Indicators Data which showed company gross operating profits fell 4% in the March quarter. The consensus forecast was for -2.5%. First quarter inventories rose by 0.9% above the consensus forecast of 0.7%. The Australian dollar has fallen slightly after the release of this data.

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