SYDNEY: The Australian sharemarket fell more than one per cent before Chinese stock watching pulled it back above key technical support.
The S&P/ASX 200 index fell through technical support at 5000 points to a low of 4973, but in another choppy low volume session it recovered to close down 10.2 points, or 0.2 per cent, at 5030.4.
Trade was quiet ahead of the US Labor Day holiday and the Us Federal Reserve monetary policy meeting next week.
The outlook for US rates was not made more clear by the US non-farm payroll data on Friday which missed forecasts, but was not weak enough to suggest the Fed would not move in coming months.
“The August result was broadly in line with the year-to-date average of 212,000, signalling continued strength in job creation,” Westpac economist Elliott Clarke said.
“Perhaps of greater significance for policy is that the unemployment rate has now fallen to 5.1 per cent, lower than at any time since 2008 and also in the middle of the FOMC’s ‘longer-term’ expectation.”
However, non-farm payrolls were well short of the 270,000 hit in the beginning of the year and the unemployment rate was flattered by a fall in the participation rate as a record 94-million Americans remained out of the labour force.
Before the jobs report Richmond Fed President Jeffrey Lacker said that even if the August employment report came in weak, Fed officials should view it as a “one month blip” that would not alter the strong labour market picture over the last several years.
The Australian dollar hit a fresh six-year low of US68.95¢ this morning before edging back to US69.20¢ as it continued to get dragged in the commodity and emerging market currency rout.
Government 10-year yields rose 2.5 points to 2.652 per cent after the AiG performance of construction index jumped 6.7 points to 53.8.
The Shanghai composite index resumed trade from a two-day break with a 2 per cent tumble, bounced to a one per cent gain and was down 1.5 per cent at the close of the ASX.
