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FIVE at FIVE AU: Employment numbers show RBA cuts are kicking in; ASX dips

Published 18/01/2024, 04:03 pm
© Reuters.  FIVE at FIVE AU: Employment numbers show RBA cuts are kicking in; ASX dips
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The ASX is lower today. The S&P/ASX200 dropped 42.10 points or 0.57% to 7,351.00 setting a new 20-day low. The index has lost 2.07% for the last five days but is virtually unchanged over the last 52 weeks.

The bottom-performing stocks in this index are Liontown Resources (ASX:LTR) and Sayona Mining, down 9.93%and 6.38% respectively.

Liontown tanked after Albemarle effectively shut the door on a future takeover, selling a $123 million stake in the company at $1.26 per share.

The selldown was put of Albermarle’s cost-cutting measures as it looks to "re-phase its organic growth investments and optimise its cost structure in response to changing end-market conditions, particularly in the lithium value chain".

Looking at the sectors, Financials made it into the green with a 0.21% rise. Real Estate was the worst performed losing 2.09%. Health Care and Energy were the next biggest losers down 1.06% and 1.05% respectively.

On the small cap front, the S&P/ASX Small Ordinaries (XSO) dropped 0.56% for the day to 2,841.90 and is down 1.52% for the past five days.

Unemployment rate steady

The full effects of The Reserve Bank of Australia’s cash rate rises seem to be taking hold, with the Australian Bureau of Statistics reporting that there were 61,500 fewer people (once seasonally adjusted) employed by the end of December.

December saw a decline in employment numbers to 14.2 million, a shift following unusually high employment growth in October and November, which collectively added 117,000 jobs. This trend was concurrent with the employment-to-population ratio and participation rate, both of which reached record highs in November.

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Despite these changes, the unemployment rate held steady at 3.9%, an 18-month peak. A marginal decrease in the seasonally adjusted participation rate to 66.8% contributed to balancing the increase in the number of Australians unemployed.

David Taylor, ABS head of labour statistics, said: "With employment dropping by 65,000 people, along with a small fall in the number of unemployed people (1,000), the unemployment rate remained steady at 3.9% in December.

"The fall in employment in December followed larger than usual employment growth in October and November, a combined increase of 117,000 people, with the employment-to-population ratio and participation rate both at record highs in November."

In light of these developments, all four major banks, along with the majority of economists, now concur that the RBA has concluded its interest rate hikes. They anticipate a reduction in the cash rate in the latter half of 2024.”

IG Markets analyst Tony Sycamore said, “Make no mistake, the labour market is cooling, and following a recent run of softer inflation data, RBA rate cuts are coming. Q4 inflation data, scheduled for release on January 31, will determine whether expectations of two 25bp RBA rate cuts become three in 2024.”

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