Daily Market Reports | Apr 12 2013
By Greg Peel
The Dow rose 62 points, or 0.4%, while the S&P gained 0.4% to 1593 and the Nasdaq added 0.1%.
What a shock that the Australian March jobs numbers released yesterday showed a loss of around half the jobs apparently added in February, and that the unemployment rate rose to 5.6%. If anything can be relied upon in this world it is that jobs numbers, whether here, in the US or elsewhere, are volatile. Economists were not expecting a rise in unemployment from 5.4%, but then anecdotal evidence over past months would suggest that number simply had to rise at some point.
The Aussie dropped on the news, although the RBA acknowledged a weakening labour market in its recent statement yet still didn’t see any need to cut its rate. Thus it wasn’t long before offshore markets bid the currency of favour back up again and we’re now back at US$1.0549. And probably looking cheap at this point.
US weekly new jobless claims showed a fall of 42,000 last week which is usually good news except that claims have been rising in recent weeks. If monthly numbers are volatile, weekly numbers are basically a guess and giggle.
US chain store operators cited a weaker employment picture in March as one reason why monthly sales were disappointing. They also pointed to heavy snow over the period which kept shoppers indoors, but no one is expecting a big rebound in sunnier April. Jobs and sequester budget cuts are still biting.
An industry body announced that global PC sales were down 14% year on year in the March quarter – news that had hardware makers being sold off last night, which is why the Nasdaq’s performance was subdued.
Yet Wall Street struggles to find a reason not to buy in general. It’s a good news/good news story, in which either an improving economy on the one hand or guaranteed Fed support on the other makes selling seem a bit pointless. As to how long this particular run can last is another matter, but until there is some left field trigger there’s not much stopping the tide at this point. Maybe this reporting season now underway will provide some shocks.
Brokers are reporting that retail buyers have begun to come out of the woodwork, albeit cautiously at first. They are favouring defensive and higher yield stocks, just like another market I know, as a foundation for a portfolio which may yet add riskier cyclicals at some point, but just not yet. When they do, watch out for the correction.
The International Energy Agency last night downgraded its global oil demand growth forecast to 795,000 extra barrels per day in 2013 from a previous 820,000bpd. Weakness in Europe was cited for the cut. Brent crude dropped US$1.59 to US$104.20/bbl last night and West Texas fell US$1.18 to US$93.46/bbl.
The dollar-yen again balked at parity last night, sending the US dollar index down 0.3% to 82.25. Gold managed only a US$2.20 rebound to US$1560.90/oz and base metals were mixed on small moves. Spot iron ore rose US30c to US$140.90/t.
The SPI Overnight rose 9 points, or 0.2%.
The US reporting season hots up in earnest tonight, with reports from America’s biggest bank, JP Morgan (Dow), and from the largest holder of mortgages, Wells Fargo. March retail sales numbers are also released.
EU finance ministers meet tomorrow to chew the fat and think about something stupid they can say in a press release. There are no specific decisions to be made, but there’s always a good chance someone will put their foot in it.
Rudi will appear on Sky Business tonight at 7pm.
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