Australian Share Market Sees Gains Despite Employment Surge
The Australian share market experienced a surge in employment, which increased the odds of the Reserve Bank of Australia lifting rates for the first time since 2023. However, the market shrugged off this news and instead focused on easing geopolitical tensions over Greenland.
Market Performance
The S&P/ASX 200 rose 65.8 points, or 0.8 per cent, to 8848.70, with nine of 11 sectors higher. The benchmark had hit an intraday peak of 8864.5 just before the jobs report, which showed the unemployment rate fell from 4.3 per cent to 4.1 per cent in December, while employment jumped 65,200, more than double the 30,000 expected.
Rate Hike Expectations
Bank of America, HSBC, and UBS all now see a February rate hike, while money markets price a 60 per cent chance of a move, up from 30 per cent on Wednesday. The Australian dollar touched a 16-month high against the US dollar, and the three-year bond yield climbed to its highest in over two years. IG market analyst Tony Sycamore said while monthly labour force data can be volatile, this “monster” jobs report aligns with the RBA’s assessment that conditions remain tight and had an immediate impact on markets.
Sector Performance
Energy was the strongest sector as Brent crude oil traded near $US65 per barrel. Woodside Energy jumped 2.9 per cent to $24.20, while Santos rose 5.3 per cent to $6.38 after the energy producer confirmed its Barossa LNG project has begun loading its first cargo. The major banks rebounded from heavy selling, with National Australia Bank rallying 3 per cent to $42.43 after Macquarie upgraded the sector.
Notable Stocks
Materials were lower as Fortescue fell 5.1 per cent to $21.48 after an analyst said it posted a marginally weaker December quarter than expected. Northern Star dived 8.4 per cent to $26.18 as it cut its full-year guidance to 1.6 million to 1.7 million ounces of gold sold. Rival Regis Resources lost 7.8 per cent to $7.58 as it produced 96,600 ounces of gold in the December quarter.
Stocks in Focus
DroneShield rose 9.5 per cent to $4.73 after Bell Potter lifted its price target on the stock by 13 per cent to $5. IperionX firmed 5.4 per cent to $7.79 after it received a $US300,000 order from American Rheinmetall to produce 700 lightweight titanium components for US Army heavy ground combat vehicles. Netwealth slid 3.8 per cent to $24.87 despite the investment platform posting a second consecutive record quarter.
Conclusion
In conclusion, the Australian share market saw gains despite a surprise surge in employment, which increased the odds of a rate hike. The market focused on easing geopolitical tensions and positive news from various sectors, including energy and banking. While some stocks experienced losses, others saw significant gains, making it a mixed day for the market. As investors continue to monitor the situation, it will be interesting to see how the market reacts to future developments.
