The Australian sharemarkets will start the week with a loss after a strong October jobs report brought a possible December rate rise from the US Federal Reserve much closer.
A surprisingly strong 271,000 new jobs were reported in the US for last month, an estimate much bigger than any one had thought.
And there were an extra 12,000 new jobs found for weak September and August, further underlining the strength of the jobs market with unemployment down to 5% from, 5.1%.
And US wage growth jumped to an annual 2.5% – all of which saw economists step up forecasts of the first rate rise in eight years in the US.
So the Aussie dollar fell more than 1% to just under 70.50 US cents and will probably drift back towards the 70 cent mark.
All of which set the ASX up for a fall of around 20 to 30 points this morning. That will be in contrast to the finish here on Friday where the market ended well into the green after an early 40 point stumble.
The jobs report came early morning in the US on Friday and around midday in Europe, so the market reactions were mixed.
Eurozone shares rose 0.7% by the close. However the US S&P 500 fell by around 0.8% immediately after the jobs report, but they then recovered to end the day flat to slightly higher as investors realised the rate rise, if it comes, will be a positive, not a negative for the economy.
Over the week, global shares saw solid gains helped by good economic data, and growing acceptance of a possible Fed rate rise in December.
Over the week US shares rose 1%, Eurozone shares added 1.5%, Japanese shares rose 0.9% and Chinese shares surged 6.1%.
In fact Chinese shares are now 20% up from their August low.
Australian shares lost 0.5% though, dragged down by banks and mining stocks (especially the NAB and BHP Billiton).
Mining and energy stocks will be weaker today because of the falls on Friday in oil, gold and copper prices.
The Dow was 46 points, or 0.3%, higher at 17,910, the S&P 500 index ended little changed at 2,099, and the Nasdaq Composite closed 19 points, or 0.4%, higher at 5,147.
Today’s start won’t match Friday’s solid close.
Friday saw a very weak start as BHP shares were sold off savagely on reports of a big dam burst at a Brazilian iron ore mine and loss of life, a story that will continue to play out today among investors.
The ANZ traded ex-dividend which added to its own negativity.
But sentiment changes – BHP shares rebounded and buying in the major banks pushed the market into the green and the ASX 200 ended Friday up 22 points, or 0.4%, to 5215.
But over the week the index fell half a per cent.
