Things aren’t looking good on Wall Street at the moment, with US stocks finishing August in decline for the fourth straight day.
This represents the weakest performance in seven years, as Powell’s Friday warning of more monetary policy pain reverberated and sell-offs were underway in New York.
We saw the Dow (-0.9%), the S&P 500 (-0.8%) and the Nasdaq (-0.6%) all finish lower by less than a per cent, and there were no real winners among the big stocks, with Atlassian (NASDAQ:TEAM) (-1.5%), Apple (NASDAQ:AAPL) (-1.1%) and Amazon (NASDAQ:AMZN) (-1.5%) all down by more than a per cent. The mercurial Netflix (NASDAQ:NFLX) bucked the trend, up 1.3%.
Over the month, the Dow lost 4.1%, the S&P 500 dropped 4.2% and Nasdaq shed 4.6%.
Similarly, the ASX is expected to start September – a traditionally flat month for the markets – sharply lower when trading starts today.
ASX futures were down as much as 72 points or 1.04% to 6836 points early this morning.
Aussie jobs on the agenda
There is some cause for optimism amid the doom and gloom, as the much-anticipated Jobs and Skills Summit kicks off today.
“This week’s Jobs and Skills Summit is the talk of the business world at the moment,” said CreditorWatch chief economist Anneke Thompson.
“There is strong hope among all sectors of the economy that some real, immediate actions can be taken to help fill some of the 480,000 jobs that are currently available in Australia. Led by the Prime Minister and Treasurer, and supported by other key ministers, the summit will recommend immediate actions and opportunities for medium and long-term reform.”
But will it be just another talkfest, or will it broker new partnerships, such as the unlikely alliance between the Australian Council of Trade Unions (ACTU) and the Business Council of Australia (BCA) over paid parental leave?
“This summit will be critical for Australia’s future economic outcomes, as the lack of workers is impacting many businesses – particularly small businesses – ability to operate at full capacity,” Thompson said.
Australia is enjoying a 3.4% unemployment rate – the lowest since 1974. The number of job vacancies now outstrips the number of unemployed people. So far, so good. But are we seeing peak employment?
“We may be seeing early signs that some heat is coming out of the labour market, as the total number of people employed dropped for the first time since October 2021,” Thompson said. “The reason the unemployment rate also dropped was that the participation rate (the proportion of Australians currently in the job market) also declined.”
There is also concern about the impact of inflation on wages, and vice versa. The ABS Wage Price Index Data tells us that real wages have been in decline since June 2021.
“The high savings rate has meant many Australians have not felt the impact of this drop immediately, however, the total savings rates of Australians are now also starting to drop. This means that many people are now using their savings pool to meet higher interest repayments and the general higher cost of living,” Thompson said.
Also high on the agenda at the summit will be the gender pay gap, including the poor bargaining position of those in feminised labour, such as aged care and child care workers – the ‘care economy’ – who are some of the lowest paid people in the country.
The ACTU is pushing for greater collective bargaining in these low-paid industries, while groups from both sides of the aisle, including the BCA, are keen to see better paid parental leave and child care subsidies, policies which pay for themselves by freeing women up to join the job market and alleviating the labour shortage in the process.
Opposition leader Peter Dutton will not attend the summit, but Nationals leader David Littleproud plans to be there. He says he is attending to ensure that regional Australia is not forgotten.
Russia puts the freeze on the West
In worrying news for Europe, Russia’s state-run Gazprom (MCX:GAZP) has switched off the Nord Stream 1 gas supply to Europe for what it calls three days of maintenance.
There are growing fears on the continent that the major energy artery, which accounted for 35% of Europe’s Russian gas imports in 2021, will remain closed off as countries in Europe stare down winter, with customers Germany and France the most exposed.
Russia had already cut supply to just 20% capacity as a result of its ongoing stand-off with the West over Ukraine.
More numbers
Global oil prices fell by roughly 2.5% yesterday in response to continued concerns about weaker global oil demand, while OPEC and US oil supply are at the highest levels since April 2020. Brent crude fell by US$2.82 or 2.8% to US$96.49 a barrel, while US Nymex crude dropped by US$2.09 or 2.3% to US$89.55 a barrel.
European energy stocks fell by 2.6%, the pan-European STOXX 600 index fell by 1.1% and was down 5.1% over the month. The German Dax index lost 1.0%, while the UK share market slumped by 1.1%.
Base metals fell by as much as 3.7% on the London Metal Exchange, with tin down the most and nickel staying afloat (up 0.2%).
Gold futures fell by US$10.10 an ounce or 0.6% to US$1,726.20 an ounce, with spot gold hovering at US$1,711 an ounce at the US close.
Iron ore futures rose by US27 cents or 0.3% to US$104.76 a tonne.