Stronger employment fails to impress
By Michael McCarthy (Chief Market Strategist, CMC Markets)
Better than expected jobs numbers in the US overnight failed to inspire markets. Instead, the release of the minutes of
the last US Fed’s FOMC meeting appeared to focus attention on the risks associated with stimulus withdrawal and the
declining potential impact of further stimulus. Shares fell, interest rates rose and gold came under renewed pressure.
A greater concern to Australian investors is the weakness in industrial metals and oil. Copper fell again, resuming a
six-day downtrend after yesterday’s brief respite. Zinc, lead and aluminium also dropped, suggesting further pressure on
mining stocks today. Given yesterday’s market leading performance from the energy sector, and the potential for a
reversal after oil fell overnight, resources may be a significant drag at the open of the Australian market today.
Data due today has the potential to paint a new picture. Inflation data from China could impact regional trading.
Locally, the release of retail sales and building approvals numbers for November will likely colour views of the
Australian economy. Retail stocks have run on anecdotal reports of stronger December trading, so today’s release may not
have a direct impact. Investors and traders are more likely to focus on the building approvals, given its status as a
leading indicator and the potential to impact RBA action. Forecast to show an increase of 0.4% for the month (October
0.5%), any significant deviation is likely to move markets.
ends