.svg "close (3)"){kind=small}
Image Source: Adobe Stock
Morning Research Notes - 05.08.24
Last week the July nonfarm payrolls report revealed that the US economy added only 114,000 jobs, while the unemployment rate rose to 4.3%. This unexpected data has intensified recession fears, leading to a significant drop in US interest rate expectations and market volatility. In response to these economic uncertainties, spot gold decreased by 0.1% to $US2443.24 per ounce, Brent crude fell by 2.5% to $US77.50 per barrel, and iron ore prices increased by 0.7% to $US103.35 per tonne. The VIX index, measuring market volatility, increased by 25.8% to $US23.39.
Macro-economic themes have been the main market driving force in August. Nonfarm payrolls report revealed that the US economy added only 114,000 jobs, while the unemployment rate rose to 4.3%. This unexpected data has intensified recession fears, leading to a significant drop in US interest rate expectations and market volatility. Economists now predict multiple rate cuts by the Federal Reserve, as concerns about the labour market’s slowdown and broader economic stability grow. Additionally, the labour force participation rate among prime-age workers increased to its highest level since 2001, reflecting strong labour force growth despite the rising unemployment rate. The market is beginning to anticipate poor economic growth which has driven the securities exchange in the US and Australia.
On Friday, the ASX 200 demonstrated a downward trend, closing 2.16% lower. This trend was mirrored across all major sectors. The Healthcare, Utilities, and Materials sectors saw modest decreases of 1.58%, 0.06%, and 1.47% respectively. The Information Technology sector, however, experienced a substantial fall of 2.76%, followed by the Financials sector witnessing a price decrease, dropping by 2.59%. Commodity markets witnessed a downturn on Thursday, with Aluminum, Copper, decreasing by 0.63%, 0.23%, and Nickel Zinc rising 1.80%, and 0.25% respectively.
.
In other news, Argo Investments takes profit hit, Ramsay Health Care profits slip on write-downs, and TPG confirms renewed Vocus talks. (Source: AFR)
Chart of the day
In July, the US labour market showed weaker-than-expected performance, with payroll employment rising by only 0.1% for the fourth consecutive month and the unemployment rate increasing from 4.1% in June to 4.3%. This trend supports the possibility of a Fed rate cut in September, especially if the labour market deteriorates further. The unemployment rate has risen from a recent low of 3.4% and now exceeds the Fed’s estimates of the NAIRU. The Sahm rule’s threshold has been met, indicating a potential recession. Employment has been flat, with a significant gap between employment and payroll jobs likely to be partly closed by data revisions. Job losses have increased, and the job vacancy rate is back to pre-COVID levels.
Source: Livewiremarkets
If you want to receive our top 3 income stocks click on the button below:
Invest Well,
Australian Stock Report
