St George Economics economy and finance update
Sentiment weakened slightly, with share markets retreating after a strong rally in recent months. Financial markets shrugged off some further good news on the US labour market.
In Europe, the Euro Stoxx fell 0.4%. The S&P500 fell 0.4%, the Dow was down 0.2%, and the Nasdaq dropped 0.1%.
US treasuries fell marginally (yields rose) as stronger-than-expected jobless claims boosted hopes that the labour market was improving further.
However, ongoing growth concerns and weaker share markets kept bonds still well-supported.
The US dollar rose against most currencies, after the positive jobs report. It lifted to above ¥100 against the Japanese yen for the first time in four years.
The yen has continued to weaken since the BoJ took bold policy action to fight deflation.
The Australian dollar initially rose after strong domestic jobs data yesterday, but weakened to below 1.01 overnight, reflecting a stronger US dollar.
The prices of most commodities were weaker broadly on US dollar strength, although the CRB index gained on higher grain prices. Oil, copper and gold prices were weaker.
Australia's unemployment rate fell from 5.6% in March to 5.5% in April following the creation of 50.1k jobs in April.
The number was larger than expected and some retracement seems likely in the May numbers.
That said, there has been an improvement in the labour market when looking through recent volatility, suggesting that the economy is still expanding and that previous rate cuts are slowly having an impact.
Consumer prices rose 2.4% in the year to April, lifting from an annual rate of 2.1% in the previous month.
Despite rising, consumer price pressures remain subdued. In other price data, producer prices fell 2.6% in the year to April possibly due to excess capacity.
Little evidence of inflationary pressures will leave authorities comfortable with keeping monetary policy settings loose, although they will likely continue to keep a watchful eye on the property market.
The New Zealand unemployment rate fell from 6.9% to 6.2% in the March quarter, the lowest in three years.
The fall in unemployment reflected a 1.7% surge in employment. Annual growth in employment however, remained soft at 0.3% in the year to the March quarter.
The Bank of England (BoE) left monetary policy unchanged. Interest rates were left on hold at 0.5% and the asset purchase target was unchanged at £375bn.
UK industrial production rose 0.7% in March, while factory output rose a solid 1.1% following a 0.7% rise in February. Therefore most of January's 1.9% slump in manufacturing has been reversed.
US initial jobless claims fell 4k to 323k in the week ending 4 May, to a 5-year low.
Additionally, with no special factors reported to distort the data confirms that fewer layoffs are taking place.