US jobs report reveals improving labour market

US Non-Farm Payrolls data came in stronger than expected on Friday night. The data revealed a larger than expected gain in employment for the US economy last month, with 938,000 jobs added. The unemployment rate also fell by more than expected, falling from 5.7% to 5.4%. The solid numbers created a splash in markets on Friday, as market participants brought forward their expectations of policy “normalisation” from the US Federal Reserve. The US Dollar spiked higher, while the US 10-Year Treasury yield lifted back above 1.3%.

ASX 200 edges to fresh records, led by financials

The Australia 200 has edged to fresh record highs this morning, before pulling back slightly by early afternoon trade. The move has come largely due to a jump in financial stocks, which has benefitted from the lift in global bond yields following Friday’s better than expected US jobs report. The sector also received a boost from Suncorp Group Ltd's results published this morning, with its shares up more than 8% today after the company announced a special dividend and a share buy buck scheme worth approximately $250 million.

Gold prices plunge in thin Asian trade

The price of Spot Gold took a spectacular plunge this morning, as the yellow metal extended its post-NFP losses. Price plummeted from around $US1762, where it closed on Friday night, to fetch as low as $US1681, as the combination of a stronger Dollar, higher yields and thin trading conditions in Asian trade today fed bearish sentiment towards the commodity. The drop in the value of gold also impacted the ASX 200 today. The materials sector has been the drag on the index, with gold miners down across the board.

Delta-variant continues to weigh on global economic outlook

Concerns about the Delta variant of the Covid-19 virus continues to weigh on the global economy, with outlook for global growth clouded by uneven vaccination rates across the world. Those fears have been further inflamed recently, with an outbreak of the Delta variant in China raising the prospect of potential lockdowns in the world’s second largest economy as the virus variant renders the country’s vaccination campaign less effective.

US inflation data to highlight the week’s macro calendar

It’s relatively light on the economic calendar this week compared to the last fortnight. However, the focus in markets is likely to remain on US fundamentals and the likely path to policy tightening by the US Federal Reserve. US CPI and PPI data will be the key risk events, with market participants watching for clues about whether inflationary pressures in the US economy over recent months are indeed as transitory as Fed officials have implored.

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Kyle Rodda | Market Analyst, Australia
09 August 2021