The offshore concerns added to worries over the health of the domestic economy, with last week’s disappointing jobs report overshadowing better-than-expected 2Q GDP data.
The ASX 200 shed 48 points (-1.1%) for the week, closing at 4195.
Gold miners were among the leading gainers on the back of continued strength in bullion prices. Newcrest Mining (ASX:NCM) added 1.9% whilst OceanaGold (ASX:OGC) soared 10%.
Among the big four, National Australia Bank (ASX:NAB) slipped 0.8% amid reports it’s interested in acquiring over 600 Lloyds branches in the UK.
Macquarie Group (ASX:MQG) disappointed the market with another profit downgrade. MQG shares sank 8.6% for the week.
A host of key data last week offered a mixed assessment of the domestic economy.
On the employment front, the latest ANZ Job Ads Survey showed the number of job advertisements falling 0.6% in August – the second straight monthly decline.
On-year, job ads were up 6.1%, which was the slowest yearly growth since February 2010. Newspaper ads slumped 7.3% on-month whilst internet ads fell a more modest 0.5%.
The deteriorating jobs market was confirmed later in the week when the unemployment rate unexpectedly rose to 5.3% in August (from 5.1% in July). Economists were expecting the rate to remain unchanged.
The economy shed 9,700 jobs in August, well below estimates of a 10,700 gain. Full-time employment fell by 12,600, partially offset by a 2,900 increase in part-time jobs.
Both pieces of data provided further evidence of employers becoming more cautious amid the recent global market turbulence.
The market volatility was also cited by the RBA when it decided to leave the official cash rate on hold (4.75%) at last Tuesday’s meeting.
The central bank said the near-term outlook had weakened compared to a few months ago but the long-term growth was likely to be at trend or higher.
It stuck with its previous stance on inflation, highlighting concerns about the medium-term outlook for CPI even though it has remained within the RBA’s 2% – 3% target band.
On the recent US and European volatility, the RBA said there was little evidence available to gauge the impact on other regions of the world economy.
However there was some good news with Australia’s economy growing 1.2% in the June quarter. The GDP increase was higher than economist estimates of a 1% rise.
Inventory rebuilding was the main driver of the result, with growth coming mainly from the mining states, Queensland and WA.
Household consumption was also stronger in the quarter, likely reflecting the lack of interest rate hikes since November.
However net exports subtracted 0.5% from the result, with coal shipments yet to fully recover from the December flooding.
In other economic news, the number of home loans approved grew 1% in July, missing expectations of a 1.6% gain.
Also, Australia’s current account deficit narrowed to $7.4 billion in the June quarter, from an upwardly revised $11.1 billion in the previous quarter.
International markets had a poor finish to the week as euro-zone debt fears and the health of the US economy returned to the forefront of investor concerns.
Crucial speeches by Barack Obama and Ben Bernanke were the catalyst for the early week gains, with investors hopeful the two would introduce new stimulus measures to support the economy.
However the mood soured towards the week’s end amid reports German banks were being instructed to prepare for a possible Greek debt default.
For the week, the Dow lost 2.2%, the S&P500 fell 1.7% and the Nasdaq dropped 0.5%.
The losses were more intense in Europe, with the German DAX sinking 6.3%, the French CAC slumping 5.5% and the UK FTSE down 1.5%.
Asian markets were also weaker on the back of global macroeconomic concerns. The Nikkei declined 2.5%, whilst the Hang Seng (-1.7%) and Shanghai Composite (-1.1%) also contended with data showing inflationary pressures in China.
Among the commodities, gold slipped 0.9% whilst oil rose 0.9%. Base metals were generally weaker, with aluminium and copper giving up 2.8% each.
Written by: marketpulse Other posts from: marketpulse
Posted in Weekly Market Wrap
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