ASX to open lower as weak US jobs data sparks jitters; $A rallies
A softer-than-expected July non-farm payrolls report spurred concerns about the health of the world's largest economy. Just 73,000 jobs were added in the month – well short of the 100,000 forecast by economists. Adding to the gloom, previous months' figures were revised sharply lower, with a combined 258,000 jobs stripped from the May and June tallies. That dragged the three-month average to 35,000 – the slowest pace of hiring outside the pandemic since 2010.
ASX futures slipped 32 points, or 0.4 per cent, to 8710, tracking a steep decline on Wall Street, where the S&P 500 shed 1.6 per cent on Friday. The Australian dollar jumped 0.8 per cent to US64.7¢ as the weak data sent the greenback tumbling.
Perpetual head of investment strategy Matthew Sherwood said the report confirmed that earlier signs of cooling demand were now showing up in the labour market.
'Domestic demand had already been slowing through the first half of the year, and now we're seeing that reflected in jobs,' Sherwood said. 'The revisions were the key story – they suggest the market's been overestimating the strength of the economy.'
He warned that investors were beginning to question whether valuations could hold up as the cycle turns. 'We're sitting at valuation levels close to the highest in two decades,' he said. 'With the economy looking like it's approaching stall speed, that's bound to affect earnings expectations.'
The US dollar slumped on the jobs report, fuelling gains in the Aussie, which was last up 0.6 per cent to US64.62¢ ahead of Monday's open.
Locally, attention shifts to August earnings season, with a heavy slate of results due this week from names including REA Group, AMP, News Corp, Nick Scali, QBE Insurance and Block.
Markets are also eyeing the Bank of England's upcoming interest rate decision, with economists tipping a 25 basis point cut that would lower the UK cash rate to 4 per cent.
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