The Overnight Report: All Quiet Ahead Of Jobs

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By Greg Peel

The Dow fell 5 points and the S&P 0.1% to 1125 while the Nasdaq lost 0.5%.

Wall Street probably needn't have bothered last night ahead of tonight's jobs number. While all jobs numbers have been important since the GFC this particular release is coming at a time America is very worried its recovery is failing. Employment is the key to a consumer-based economy.

Wednesday night's ADP private sector number surprised to the upside to provide hope of a good result tonight, but then last night's weekly jobless claims number jumped by 19,000 when a fall of 10,000 was expected. Total new claims were 479,000 for a 2010-to-date average of 450,000. Economists suggest new claims must fall under 400,000 just to beat natural population growth.

Population growth is particularly in focus in the northern summer when a new round of school leavers hits the employment market. Teenage unemployment is running at three times the national average – a reality somewhat reflected in last night's monthly chain store sales figures. Youth clothing had been holding up well in 2009 given the large proportion of income teenagers will dedicate to fashion, but now it is the youth market which is dragging down average chain store sales numbers.

The net results were mixed, with some chains doing well and other poorly. But consumer data are all over the shop. Last night rubber shoe maker Crocs posted a shockingly good earnings result which saw its shares up 10%.

It's crunch time for those chains servicing the back-to-school season, which is just beginning. For some stores it's the biggest season after Christmas given US government school children don't wear uniforms.

But back to unemployment. Consensus has 55,000 jobs being lost in July and a tick up in the unemployment rate from 9.5% to 9.6%. However, the numbers are again impacted by the expiry of temporary census jobs, so Wall Street will be looking at the private sector numbers only where expectations are for anything up to 100,000 jobs to be added.

The weekly jobless claims number had the Dow down 68 points from the bell, but it drifted back over the course of the session.

There were no surprises on the other side of the pond, where the ECB kept its cash rate on hold at 1% and the Bank of England at 0.5%. ECB president Jean-Claude Trichet talked up the buoyancy of the European economy in the second quarter and the positive round of bank stress tests, but shocked no one by suggesting the second half will not be quite as solid. The BoE elected not to re-implement quantitative easing.

Currencies were thus steady last night with the US dollar index steady on 80.80 and the Aussie steady at US$91.65. Gold fell US70c to US$1194.90/oz.

Oil fell US56c to US$82.01/bbl while base metals were mixed. Copper fell 1%.

The SPI Overnight rose 3 points.

Apologies for a brief report today but there's really not much else to say. Tonight's US jobs numbers will also be accompanied by monthly consumer credit.

Today in Australia sees the release of the RBA's quarterly monetary policy statement and the construction sector PMI. Equinox ((EQN)) will report its interim result. Last night ResMed ((RMD)) posted a quarterly report in the US which beat on earnings and missed on revenue, sending its shares nowhere, and it will post its full year result in Australia today. The company also announced a 2-for-1 stock split.

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