australian share market closes lower despite encouraging jobs data 906292015

The Australian share market on Thursday plunged at the open amidst the gloom surrounding commodity prices but later managed to recoup most of the losses following the release of encouraging jobs data. However, that was not enough to take the indices into positive territory, which declined for the fourth consecutive day.

The S&P/ASX 200 closed lower by 22.2 points, or 0.40 per cent, at 5,331.4, while the All Ordinaries index was down by a similar percentage, or 21.6 points, at 5,310.6. The losing sectors were led by materials (-1.58 per cent), energy (-0.55 per cent) and financials (-0.52 per cent). Sectors which gained included consumer staples (+0.80 per cent), utilities (+0.77 per cent) and healthcare (+0.36 per cent).

The highly anticipated jobs report for December showed that Australia added 37,400 jobs, much better than expectations of an increase of only 3,800. The growth in jobs comprised an impressive increase of 41,600 positions in full-time employment, net of a fall of 4,100 in part-time jobs, according to CNBC. The unemployment rate fell to 6.1 per cent, below the market consensus expectation of 6.3 per cent.

The strong jobs growth numbers were welcomed but analysts were inclined to be somewhat sceptical given the recent volatility in jobs data out of the Australian Bureau of Statistics. "It takes away the need for a rate cut, if anyone believes the data," said BBY senior private client adviser Henry Jennings, as reported by The Sydney Morning Herald. "I'm not sure anyone believes the jobs figures any more. I'm not sure they're particularly reliable."

BHP Billiton Ltd (ASX:BHP) fell 1.1 per cent to AU$26.90, Rio Tinto Ltd (ASX:RIO) was down 2.45 per cent to AU$54.18, and Fortescue Metals Group Ltd (ASX:FMG) declined 2.98 per cent to AU$2.27 as Citigroup lowered their forecast for iron ore for 2015 to US$58 per tonne. According to the Business Spectator, that led iron ore to decline for the sixth consecutive session to US$67.80 per tonne.

A report in Bloomberg said the slump in commodity prices, particularly copper, which dropped yesterday to the lowest since 2009, makes it difficult for Glencore PLC (LON:GLEN) CEO Ivan Glasenberg to acquire Rio Tinto Ltd (ASX:RIO). “It was going to be extraordinarily difficult anyway, but I don’t know that it’s even possible in this environment,” said Chris LaFemina, an analyst at Jefferies LLC. “Glencore is just not in a position of strength right now relative to Rio.”

Energy stocks were mixed. Santos Ltd (ASX:STO) jumped 1.77 per cent to AU$7.48, while Oil Search Ltd (ASX:OSH) was down 0.14 per cent to AU$7.21. Woodside Petroleum Ltd (ASX:WPL) closed lower by 1.35 per cent to AU$35.06 amidst news that it proposes to cut back on investment in the light of the crash in oil prices, saying, it was “assessing the impact on near-term profitability and cash flow, and revising investment expenditure accordingly.” The company also warned that it may take write-downs of its oil and gas assets that could range between US$250 million (AU$304 million) and US$400 million (AU$486 million), said The Australian.

Banks too closed lower. Australia and New Zealand Banking Group (ASX:ANZ) fell 0.73 per cent to AU$31.50, Commonwealth Bank of Australia (ASX:CBA) was down 0.07 per cent to AU$83.51, National Australia Bank Ltd (ASX:NAB) declined 0.74 per cent to AU$33.52 and Westpac Banking Corp (ASX:WBC) lost 1.21 per cent to AU$32.79.

Australia and New Zealand Banking Group (ASX:ANZ) is the latest amongst the banks to predict further interest-rate cuts by the RBA in a bid to revive an economy struggling from the crash in commodity prices and low expected inflation, according to The Australian. “Weaker growth and lower inflation in 2015 will provide the RBA with a reason and the scope to take the cash rate down 50 basis points to 2 per cent over the first half of the year,” ANZ’s chief economist, Warren Hogan, said Thursday.

Shares in luxury retailer Oroton Group Ltd (ASX:ORL) slumped 23.4 per cent to AU$2.95 after the company warned that its half yearly earnings would likely drop by up to AU$3.5 million, according to The Age. In other retail news, Woolworths Ltd (ASX:WOW) gained 0.83 per cent to AU$30.25 and Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, jumped 1.04 per cent to AU$42.60. Lower petrol prices have put more money in the pockets of consumers, benefiting stocks in the consumer staples and discretionary sectors.

Find up to date information on the ASX at City Index.