• The market is down 8 points. The Dow Jones finished up 30 — it was up 30 at best and down 70 at worst. Now 15658.
  • The S&P 500 closed up 3 stayed above 1700 at a new record high of 1710.
  • Monthly jobs numbers came in below expectations with 162,000 jobs added against forecasts of 175,000. Last month’s number was also revised down from +195,000 to +188,000. The average work week also dropped.
  • The unemployment rate dropped to 7.4% from 7.6% against expectations of 7.5%. That came on the back of a lower participation rate down from 63.5% to 63.4%.
  • Weak economic numbers are almost positive these days as it is seen as delaying quantitative easing tapering.
  • The European Central Bank’s comments about keeping rates low for the foreseeable future helped the market and sent bond yields down and bonds up.
  • US bonds up (interest rates down) – the US 10 year bond yield fell 11bp to 2.600% from a two year high of 2.723% on the back of the weak jobs numbers. With the Fed recently expressing concern about the level of bond yields the fall in the 10 year bond yield is a positive for the US housing market if sustained. Despite that the US 30 year bond yield was up 7bp.
  • Chevron down 1.2% on results. 
  • The A$ is over 89c again but only just on the bad of a small fall in the US dollar after the jobs number. The A$ hit a low of 88.06c on Friday and is now 89.11.
  • Metal prices mixed … not a lot of movement.
  • The Japanese market jumped 3.29% on Friday bouncing from its recent sharp drop. The Chinese market was up 0.02%.
  • Resources mixed with BHP down 0.20% and RIO up 0.87% in the US with BHP closing at the equivalent of 9c down on its close in Australia on Friday.
  • European markets mixed – the UK FTSE down0.51%, the German Dax down 0.05%, the French CAC up 0.07% with Spain up 0.40%, Italy down 0.24%, Greece up 1.83%.
  • Oil price down 95c to $106.94.
  • Gold price down 40c to $1310.60.

US Economics on Friday

  • Nonfarm Payrolls: Actual 162,00, consensus 175,000, prior 195,000 (revised 188,000)
  • Nonfarm Private Payrolls: Actual 161,000, consensus 195,000, prior 202,000 (revised 196,000)
  • Unemployment Rate: Actual 7.4%, consensus 7.5%, prior 7.6%

ANNOUNCEMENTS & STORIES

  • Retail sales number for June were disappointing — recording a 0.1% increase in May. Economists had been expecting a 0.45 rise. The dollar fell to a new three-year low of US88.56c.
  • Virgin Australia (VAH)  — Expects to post a loss due to factors ranging from tough economic conditions to a transition to a new ticket booking system which will result in the airline booking a loss of between $95 million-$110 million. That compares with a net profit of $22.8 million in the previous year.
  • Paladin (PDN) — Has successfully complete a $88 million equity raising at 70c. Shares are down 29%. Morgan Stanley has cut its recommendation to Underweight from Equalweight, target price cut 18% to 80c.
  • Envestra (ENV) — Has rejected a highly conditional takeover offer received from APA as not being in the best interests of shareholders.
  • The TD Securities/Melbourne Institute Monthly Inflation Gauge was +0.5% in July. For the 12 months to July it was +2.7% up from +2.4%.
  • The Australian Industry Group Australian Performance of Services Index (PSI) fell 2.1 points to 39.4 in July. This is the lowest level since the GFC.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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