PERTH: The Australian sharemarket is substantially softer at noon, hitting its weakest point in nearly a month despite surprisingly strong official employment figures.
Australia’s unemployment rate unexpectedly dropped to a 19-month low of 5.8 per cent in November, beating economist expectations by a wide margin, despite a big jump in the number of people looking for a job.
The surprisingly strong employment figures put a rocket under the Australian dollar, which surged nearly US1c to US73.24c following the data release, but the local market continued to trend lower into noon.
At 12.05pm (AEDT), the benchmark S&P/ASX200 index was down 53.4 points, or 1.05 per cent, at 5027.1, while the broader All Ordinaries index fell 51.2 points, or 1 per cent, at 5078.7.
“We advise taking November’s Australian labour market data with a pinch of salt, but even underneath the salty surface the labour market does appear to be strengthening,” Capital Economics chief Australia economist Paul Dales said.
“This doesn’t necessarily rule out further interest rate cuts when the outlook for investment and inflation is still so weak. But it does make them less likely,” he said.
On the local market, financials were leading the market lower, with the big four banks stepping sharply into the red.
ANZ dipped 2.04 per cent to $25.89, while Commonwealth Bank was down 2.3 per cent at $78.44.
Westpac was off 2.37 per cent to $31.29, while National Australia Bank fell 2.52 per cent to $28.23.
Mining stocks were the only sector in the black, being scooped up by bargain hunters after a week of heavy selling.
The buying came despite iron ore moving to a new 10-year low of $US38.30 a tonne, down 1.3 per cent from its prior close of $US38.80 a tonne.
BHP Billiton jumped 1.57 per cent to $17.43, while Rio Tinto improved 2.66 per cent to $43.17.
Oil prices were higher on Wednesday, recovering from steep falls this week even as sentiment remained bearish over the sector’s oversupply.
Woodside lost 0.63 at $26.86 while Santos retreated 0.29 per cent to $3.49.
Consumer staples were weaker, with the big supermarkets soft.
