Strong US jobs report eases growth concerns

Stock Markets

Australian shares are poised to open higher today after US stocks closed in positive territory on Friday following the release of a much better than expected US jobs report. The report showed that US employers hired at a faster than expected pace in March and consequently acted to renew some investor confidence which was lost after February's dismal results raised economic slowdown concerns. Nonfarm payrolls rose by 196,000 which was well above the forecasted gain of 175,000 and reflected a substantial rebound from the 20,000 added nonfarm payrolls in February. The US unemployment rate also held steady at 3.8%, which is close to the lowest it has been in about fifty years and was consistent with economists' estimates. US and Chinese negotiators wrapped up their latest round of trade talks in Washington on Friday, with talks scheduled to resume this week.

Wall Street's major indexes closed higher overnight, with the S&P 500 lifting to its highest levels since 9 October 2018 on the back of a dovish Fed and US/China trade optimism. The Dow Jones and S&P 500 ended Friday's session up 40.36 (+0.15%), 13.35 (+0.46%) and 46.91 (+0.59%) points respectively. This week will see investor focus turning towards corporate earnings with major US banks scheduled to report quarterly results.

The benchmark S&P/ASX200 index closed 51.5 points (-0.83%) lower on Friday, with a late sector-wide sell off dragging the index down from its six-month high. All major GICS sectors closed lower on Friday, with the information technology sector posting the highest percentage losses.

ASX 200 futures are currently up 32 points.

Today's data releases: AUS ANZ job ads March; JPN current account February; US factory orders February; US Durable goods orders February

Commodities and Currencies

Oil prices rallied overnight on reports of US crude output growth slowing on falling oil well productivity. Morgan Stanley has consequently reduced its US crude growth projection for the year by 100,000 barrels per day, with the revised forecast reflecting a 1% drop for the year. Brent crude and WTI crude closed in positive territory at US$70.68 (+0.48%) and US$63.44 (+0.57%) respectively.

Iron ore prices are flat at US$92.90 per tonne.

The spot price of gold is currently up 0.07% at US$1293.17.

The AUD is currently flat at US71.05¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.