Following a rise to fresh highs for the Nasdaq and S&P 500 indices overnight as the Fed held interest rates steady on slowing US inflation data, the local ASX 200 market followed suit to end the session 0.44% higher.
Tech stocks were particularly strong, as were the Real Estate and Healthcare sectors.
Jobs data puts focus on RBA
Today, the ABS released labour force figures for May, revealing that the jobless rate fell to 4% from 4.1% in April as 39,700 people found work, against expectations of 30,000.
The jobs market has displayed resilience in the face of higher interest rates and a surge in foreign workers.
ABS head of labour statistics Bjorn Jarvis explained, “In April we saw more unemployed people than usual waiting to start work. Some of the fall in unemployment and rise in employment in May reflects these people starting or returning to their jobs."
According to RBC, underlying trends in Australia's jobs market show strengthening monthly job creation since late last year, a pretty steady trend in the unemployment rate for the last six months and rising hours worked since December 2023.
Commenting on the jobs data, State Street (NYSE:STT) Global Advisors’ APAC economist Krishna Bhimavarapu said, “Although the employment growth was broadly in line with expectations in May, the labour market continued to cool faster than the previous cycles.
“The annual growth in fulltime non-seasonally adjusted employment (our preferred metric) is now 85.2% down from its peak in October 2022, greater than the average fall (59.5%) of the nine previous cycles.
"This should give the RBA some relief but may not swing their general assessment.
"However, GDP growth has been subdued, and the RBA will do well to take that into consideration during their policy discussion next week.”
On what the data might mean for RBA interest rate decisions, CreditorWatch chief economist Anneke Thompson said, “It is likely that the RBA will wait until the full impacts of tax cuts flow through to retail trade, labour force and savings data, which won’t happen until late 2024 and into early 2025."
However, CreditorWatch internal data suggests weak business conditions are ahead, which will impact jobs over the rest of 2024.
Meanwhile, according to HSBC chief economist Paul Bloxham, following recent economic data, there is now a higher risk of a rate hike in the second half of this year than a cut.
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