The ASX200 hits all-time high as weak jobs data raises prospects of more RBA cuts
Australian labour force data showed a jump in the country's unemployment rate, bringing forward the expected timing of the next RBA cut and pushing the ASX200 to record highs.
The ASX200 has surged to record highs following an unexpected jump in the Australian jobless rate in September to 4.5%.
Weak labour force data boosts odds of RBA cuts
A soft jobs report has put imminent rate cuts back on the minds of Australian investors, with the ASX 200 charging to record highs. The labour force report showed slack building in the labour market after the weaker than expected 14,000 increase in employment in September combined with a rise in the participation rate (not to mention underutilisation and underemployment) to push the unemployment rate to 4.5%. That’s the highest level since November 2021.
The markets have brought forward the timing of the next RBA cut, with traders seeing a shifting balance of risks for RBA policy from slightly elevated inflation to rising unemployment. The markets are fully baking in a cut for December again, with the November meeting, which is less than three weeks away, being ascribed an approximately 80% change. This contrasts with a market not pricing in the first cut until April next year before the jobs data.
(Source: ASX, Capital.com)
The ASX200 flirts with 9100 as AUD/USD loses momentum
The ASX200 climbed as much as 1.3% following the data, penetrating the 9100 level for the first time in history. The gains were quite broad-based, with only the tech sector lagging behind. Rate sensitive sectors like real estate and financials – especially the banks – outperformed. Separately, gold stocks continued to climb courtesy of record highs in the yellow metal, with the ASX200 gold subindex doubling so far year to date.
The AUD/USD also lost its grip on the 65 handle, falling below that mark once again as a critical leg of the pair’s strength comes under increasing pressure. The AUD/USD has lost momentum recently due to a resurgent US Dollar, itself due to political developments in Europe and Japan weighing on the Euro and Yen and boosting the greenback. An emerging narrative about dovish RBA policy may add further downward pressure on the pair, with support around 0.6400.
(Source: Trading View)
(Past performance is not a reliable indicator of future results)