Stocks fall as unemployment and US inflation rise

The Australian share market has fallen for a fourth day, after the national unemployment rate jumped last month and US inflation soared.

Key points:US consumer prices surged 0.9 per cent over October and 6.2pc over the yearThe Dow Jones index fell 0.7pc to 36,080, the S&P 500 lost 0.8 to 4,645, and the Nasdaq Composite fell 1.7pc to 15,623

The All Ordinaries index lost 1.1pc to 7,655, the ASX 200 index fell 1.2pc to 7,337 and the Australian dollar was steady at 73.26 US cents 

The Bureau of Statistics said the jobless rate rose 0.6 per cent from 4.6 per cent in September to 5.2 per cent in October, on a seasonally adjusted basis with 46,000 jobs lost over the month. 

That came as more people looked for work ahead of coronavirus lockdowns easing.

EY economist Jo Masters downplayed the figures because of the shortened survey period and said more recent data showed that the jobs market had improved.

"Today's labour force survey was not what many expected it to be, largely reflecting the timing of the survey, which took place earlier than normal because of the Census and the fact that fewer full-time workers took annual leave during recent school holidays. It's old news," she said.

"Higher frequency data sources like payrolls clearly show the labour market is back on track and recovering at a faster speed than following previous lockdowns."

ASX slumps on jobs news 

The ASX opened lower after Wall Street slid as consumer prices surged in North America, with petrol and food prices fuelling US inflation and raising rate hike fears. 

By lunchtime the Australian market had fallen more than 1 per cent, with almost all sectors in the red aside from miners. 

But by the close, the market had come off its lows. 

The All Ordinaries index closed down 0.5 per cent to 7,701, while the ASX 200 index lost 0.6 per cent to 7,382 with all sectors in the red aside from miners. 

The Australian dollar fell further against a stronger greenback, down one-third of a percentage point to around 73.04 US cents at 4:30pm AEDT. 

Leading the falls on the ASX were oil stocks, after oil prices fell overnight because of a rise in US inventories. 

The best performers on the benchmark index were nickel miner Chalice Mining (+9.6pc), iron ore miner and green hydrogen company Fortescue Metals (+8.2pc), and gold miner Regis Resources (+5pc). 

Gold miners were among the gainers because the precious metal is seen as a hedge against inflation, with seven gold miners the top-performing stocks in the first 20 minutes of trade.

The worst performers on the ASX 200 were aerial mapping firm Nearmap (-12.3pc), cloud services firm Xero (-6.2pc) which said half-year before-tax earnings fell one-fifth of a per cent, and buy now, pay later company Zip (-5.2pc). 

Private hospital operator Ramsay Healthcare fell 4 per cent to $69.38 after it said quarterly unaudited net profit slumped by nearly 40 per cent to $58.1 million.

It said activity continued to be disrupted by COVID-19. 

Electrical poles and wires firm AusNet saw revenue fall for the half year.

Net profit dropped by one fifth to $177.5 million and investors get an interim dividend of 4.75 cents a share. 

It said its takeover by Brookfield Asset Management was expected to be completed by February or March next year. 

AusNet shares fell 0.4 per cent to $2.58.

Brent crude oil fell overnight to nearly 3 per cent to $US82.41 a barrel but it rose 0.3 per cent in Asian trade to $US82.85 a barrel. 

Spot gold put on one-fifth of a per cent to $US1852.88 an ounce. 

after the market closed, banking regulator APRA released its long-awaited framework for rules aimed at curbing risky lending by banks and protecting the country's financial system. 

Hot US inflation

US consumer prices rose 0.9 per cent in October, led by increases in meat, eggs, fish, vegetables, cereals and bakery products, petrol and the global supply chain squeeze.

It was more expensive to eat out, but alcohol prices fell.

Over the year to October, the US Consumer Price Index rose by 6.2 per cent, the biggest jump since 1990. 

Core inflation, a measure closely watched by the US central bank, the Federal Reserve, gained 0.6 per cent over the quarter and 4.6 per cent over the year.

The global energy crisis has seen Brent crude oil rise by nearly two thirds this year, although it slumped overnight. 

At Brent crude oil was down 2.8 per cent to around $US82.41 a barrel, while West Texas crude lost 3.6 per cent to $US81.15 a barrel. 

Westpac economist Imre Speizer said the rise in inflation was stronger than expected. 

"The gains were led by an expected surge in energy prices, but there were additional large gains for new and used cars, tobacco, medical care, and food," he said.

"Supply chain disruptions are continuing to lift prices, and there are few signs that energy price pressures are abating."

The surge in price rises added to concerns that rampant inflation will push the Federal Reserve to raise official interest rates sooner rather than later.

Inflation pressures are also brewing in the labour market, where an acute shortage of workers is driving wages higher.

High inflation is eroding wage gains, adding to political risk for President Joe Biden, whose approval rating has been falling as Americans grow more anxious about the economy.

Last week the Federal Reserve restated that high inflation was "expected to be transitory".

Ryan Sweet, senior economist at Moody's Analytics, said US inflation could stay high longer than previously estimated. 

"Risks are clearly shifting toward US inflation remaining elevated longer than previously thought, but that doesn't mean that it's permanent," he said.

"The Fed could face a situation where higher consumer prices begin to weigh on consumer spending, reducing GDP growth." 

The number of Americans filing claims for unemployment benefits fell to a 20-month low last week, other data showed.

Weekly jobless claims dropped by 4,000 to 267,000 initial claims for unemployment benefits.

US shares cop inflation hit 

US shares extended their sell-off as investors worried that the rise in inflation could be here to stay. 

All major share indexes finished in the red.  

The Dow Jones index fell 0.7 per cent to 36,080, the S&P 500 lost 0.8 per cent to 4,645, and the Nasdaq Composite fell 1.7 per cent to 15,623.

Tech stocks weighed down the index as they are dependent on low interest rates to expand. 

But electric vehicle maker Tesla rose more than 2 per cent at one stage, after big sell-offs this week on signals that founder Elon Musk will sell a big stake. 

Meta — the new name for Facebook — and Microsoft announced a partnership to integrate Workplace and Teams.

Electric vehicle start-up Rivian made its public debut on the Nasdaq in a listing expected to raise more than $US100 billion ($136 billion).

Its shares jumped 26 per cent to $US98.56 at 7:15am AEDT.

European shares end higher 

Major indexes rose in Europe.

In London, the FTSE 100 rose 0.9 per cent to 7,340, the DAX in Germany put on 0.2 per cent to 16,068, and the CAC 40 in Paris increased slightly to 7,045. 

Iron ore prices fell, with iron ore at Dalian port in China falling to a one-year low on a gloomy outlook for Chinese demand. 

At Qingdao port in China, benchmark iron ore prices were down 2.5 per cent to $US88.60 a tonne.

ABC/Reuters

Posted 10 Nov 202110 Nov 2021Wed 10 Nov 2021 at 8:58pm, updated 11 Nov 202111 Nov 2021Thu 11 Nov 2021 at 5:49amShareCopy linkFacebookTwitterArticle share optionsShare this onFacebookTwitterLinkedInSend this byEmailMessengerCopy linkWhatsApp

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