Shares Slide To Start June

By Glenn Dyer | More Articles by Glenn Dyer

Shares were mostly soft last week with Friday’s shock jobs report for May, the big unexpected event of the week which has forced investors to rethink the timing of the next US interest rate rise from the Fed.

While Chinese shares stood out with a decent 4.1% gain, US shares were flat thanks to a soft jobs report on Friday, Eurozone shares fell 2% not helped by renewed Brexit concerns and Japanese shares lost 1.1% on disappointment about the lack of more fiscal easing just yet.

Australian shares fell 1.6% thanks to the plunge in iron ore prices to well under $US50 a tonne, and worries that stronger than expected March quarter GDP growth means reduced prospects for RBA rate cuts.

Bond yields fell (the US 10 and 2 year rates plunged sharply) and the greenback sold off as the weak jobs report for May sparked speculation that further Fed rate hikes will be delayed.

Commodity prices were mixed with oil down but metals up, led by gold.

The $A rose 2.5% mostly in response to the soft US jobs report and ended around 73.50 US cents.

On Friday eurozone shares lost 1% and the US S&P 500 also lost 1% initially in response to the poor US payroll report for May, but Wall Street managed to regain most of the early losses to end down just 0.3%.

As a result, ASX 200 futures trading was also mixed and ended up just 1 point on Saturday morning, pointing to a flat start to trading for the Australian share market later this morning. A surprise rise in the iron ore price will help local sentiment – it jumped nearly 4% to $US50.08 a tonne. But in the wake of the storms along the East Coast late last week and at the weekend (and continuing today into Victoria and Tasmania), watch the prices of some of our major insurers such as Suncorp and IAG. Judging by the media reports, some companies could a rise in the number of claims starting today.

The Australian sharemarket rose on Friday after three days of falls, but the gain wasn’t enough to change the weekly loss, except for its size.

The ASX added 0.7% to 5318.9, after falling to a one-month low on Thursday, while the All Ords also rose 0.7% to 5392.5.

For the week the benchmark index fell 1.6% for its first weekly loss in eight weeks.

On Wall Street the S&P 500 index closed down 6.13 points, or 0.3% at 2,099.13 to end the week virtually flat.

The Dow fell 31.5 points, or 0.2%, to end at 17,807.06. The index had a weekly loss of 0.4%.

And the Nasdaq Composite Index declined 28.85 points, or 0.6%, to end at 4,942.52 but still finished the week higher, up 0.2%.

And US Treasury bonds and notes saw a lot of action in the wake of the weak jobs report.

The benchmark 10-year Treasury yield fell 10 basis points to 1.7%, it’s largest one-day drop in nearly four months.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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