ASX loses gains and consumers expect jobs market to boom

The Australian share market has lost its gains and Australians are more confident about their job prospects, with expectations of a rise in unemployment at their lowest in nearly three decades. 

Key points:The Dow Jones index fell 0.3pc to 36,320, the S&P 500 lost 0.3pc to 4,685 and the Nasdaq Composite lost 0.6pc to 15,886Prices at the farm and factory gate in China surged to the highest level in nearly three decades, partly because of the global supply chain squeezeThe All Ordinaries index lost 0.24pc to 7,737, the ASX 200 index fell 0.14pc to 7,424, and the Australian dollar fell 0.3pc to 73.55 US cents

The latest Westpac Melbourne Institute index of consumer sentiment found more people expected the unemployment rate to fall than rise over the next 12 months. 

The Unemployment Expectations Index dropped 11 per cent from 107.1 to 95.3 over the month, the lowest level since 1994. 

Westpac chief economist Bill Evans said this was the lowest level for the index since the mid-1990s, when strong growth sparked sustained falls in unemployment from the very high levels seen during the recession of the early 1990s. 

Westpac Consumer index November
Consumer confidence rose slightly in November from October but expectations that unemployment would fall were at their lowest since 1994. (Supplied: Westpac)

Confidence for both women and men is at record highs, with workers in real estate, accommodation, food, media, telecommunications, healthcare and retail the most optimistic about the jobs market. 

"This may be an indication of where labour shortages are likely to emerge in coming months," Mr Evans said. 

The unemployment numbers for October are out tomorrow and market economists forecast the unemployment rate will rise from 4.6 per cent in September to 4.8 per cent last month.

Overall there was little change in consumer confidence, with the index increasing by 0.6 per cent from October to November — almost the same level as the same time last year. 

Jobs jump as lockdowns endLoading

The latest payrolls and wages data from the Bureau of Statistics showed that jobs rose by 1.3 per cent over the fortnight to October 16, 2021, after a fall in the last half of September.

The ABS said payrolls jobs increased through the first half of October as lockdowns and other restrictions eased, with employment in New South Wales doing the best as payroll jobs surged by 3.5 per cent. 

ASX ends in the red

The Australian share market gave up its gains to end lower for the third day in a row after producer prices in China surged. 

By the close, the All Ordinaries index lost 0.24 per cent to 7,737, and the ASX 200 index dipped 0.14 per cent to 7,424. 

More sectors ended lower than higher with miners and energy stocks leading the falls. 

Going up were utilities, banks, technology and real estate firms. 

Nickel miner Chalice Mining was up 4.9 per cent on the ASX 200, followed by brewer United Malt (4.6pc) and National Australia Bank (+4.4pc).

Losing ground were steelmaker BlueScope Steel (-5.8pc), lithium miner Orocobre (-4.7pc), aerial mapping firm Nearmap (-4.9pc).

Chinese inflation shock

Prices at the farm and factory gate in China surged to the highest level in nearly three decades, partly because of the global supply chain squeeze.

The producer price index for October jumped 13.5 per cent from the same time a year ago, the highest level in 26 years. 

Consumer prices rose 1.5 per cent over the year to October, up from a 0.7 per cent rise in September, according to the National Bureau of Statistics.

That was slightly higher than predicted by economists. 

Evergrande debt woes

Worries about the solvency of Chinese property developers weighed on Asian shares, ahead of a deadline for cash-strapped China Evergrande Group to make a bond coupon payment. 

Evergrande is the world's most indebted property developer, owing more than $US300 billion.

But so far the Chinese real estate giant has avoided a formal default.

However, an overdue bond payment of $US148 million is due today.

In afternoon trade, the Hang Seng index in Hong Kong and the Shanghai Composite index both lost about 1 per cent of their value.

Fortescue Metals iron ore train cars sit alongside machinery.
A Fortescue Metals iron ore train prepares to unload at the company's Port Hedland facilities, May 2021.(ABC News: Rachel Pupazzoni)

FMG and Rio "green" deals

Off the back of a new green bonds scheme, iron ore miner and emerging renewable energy firm Fortescue Metals has inked a green hydrogen supply deal with US-based Universal Hydrogen.

Under the deal, FMG's Fortescue Futures Industries will supply green hydrogen to the aviation industry until 2035. 

FFI chief executive officer Julie Shuttleworth AM said demand for green hydrogen in the aviation industry was forecast to surge as new climate targets were set globally.

"This deal reinforces that green hydrogen has the potential to be a powerful fuel for a range of difficult-to-decarbonise industries, including aviation," Ms Shuttleworth said.

FFI holds a stake in Universal Hydrogen. 

Last week it signed multi-billion-dollar deals with two UK companies to supply green hydrogen, which FFI said made it the UK's biggest supplier.

And Rio Tinto will partner with a US not-for-profit group. Resolve, to set up a firm to clean up mine sites. 

The global miner will invest $2 million in Regeneration, which will process minerals from mine waste to raise money to fund mine closures and habitat restoration.

It can cost billions of dollars to clean up mines and restore the landscape. 

Weaker iron ore prices saw FMG fall 2.1 per cent to $14.28 and Rio Tinto lost 1.7 per cent to $87.51.

The Australian dollar had dropped nearly 0.3 per cent to around 73.55 US cents by 4:50pm AEDT.

Wall Street falls 

All three major US stock indexes lost ground with the S&P 500 and the Nasdaq snapping their run of eight record closing highs in a row.

The labour department's producer prices (PPI) report showed inflation continued to gather heat as ongoing goods and labour supply challenges sent price growth soaring.

Investors are also looking to tomorrow's consumer price index report for clues regarding the extent to which producer prices are being passed along to the consumers.

Jay Hatfield, chief executive of InfraCap Advisors in New York, said investors were selling shares at a high to make profits.

 "It's a risk-off day," he said.

"After PPI today and with CPI tomorrow, it's reasonable that we take a pause. Earnings season is nearly over and we're at all-time highs."

The Dow Jones Industrial Average fell 167 points or 0.5 per cent to 36,265, the S&P 500 lost 0.4 per cent to 4,683 and the Nasdaq Composite dropped 0.6 per cent to 15,886.

General Electric splits

General Electric surged 2.5 per cent after the 129-year-old industrial conglomerate announced it would split into three separate public companies to simplify its business.

The split marks the end of the conglomerate, once the most valuable US company and a symbol of US industrial might.

General Electric shares rose 2.6 per cent on the news.

Tesla plunged nearly 12 per cent, weighing down the consumer discretionary sector and extending losses, after chief executive Elon Musk's Twitter poll proposing to sell a tenth of his holdings garnered a 57.9 per cent vote in favour of the sale.

Mr Musk's move raised questions as to whether he violated a settlement with the US corporate regulator, the Securities and Exchange Commission.

Shares of Robinhood Markets dropped 3.4 per cent after the online retail trading app reported a security breach affecting about 5 million of its customers.

European markets fall

Major European markets ended in the red.

In London, the FTSE 100 index lost 0.4 per cent to 7,274, the DAX in Germany was flat at 16,041, down 0.04 per cent, while the CAC 40 in Paris fell 0.06 per cent to 7,044.

In commodities, spot gold fell 0.3 per cent to $US1826.39 an ounce, and Brent crude oil added 0.3 per cent to $US85.01 a barrel at 4:20pm AEDT.

ABC/Reuters

Posted 9 Nov 20219 Nov 2021Tue 9 Nov 2021 at 8:45pm, updated 10 Nov 202110 Nov 2021Wed 10 Nov 2021 at 6:14amShareCopy linkFacebookTwitterArticle share optionsShare this onFacebookTwitterLinkedInSend this byEmailMessengerCopy linkWhatsApp

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