US shares gain on surprisingly strong jobs rebound; ASX slips

The Australian share market has slipped into the red, giving up its early gains, as the big bank stocks drag.

By 2:15pm AEST, the ASX 200 had lost 2 points, to 6,030, while the All Ordinaries index was 4 points weaker.

The big four banks were weighing on the broader market, with shares in NAB (-1.5pc) leading the losses.

The telco and technology sectors remained higher, with shares in Telstra (+3.3pc) and WiseTech Global (+2.1pc) on the rise.

Shares in hearing implant maker Cochlear had risen 6.5 per cent, making it the best performing stock so far, after the US Food and Drug Administration approved four of its products.

On the flip side, shares in building-products company Adbri, which changed its name from Adelaide Brighton in May, had tumbled by 24.4 per cent.

It followed Adbri informing the market its subsidiary, Cockburn Cement, had lost a lime supply contract, which represented $70 million in annual revenue, from June next year.

The Australian dollar was slightly higher, buying around 69.3 US cents.

Record surge for retail sales as stores reopened

Retail turnover rose by a record 16.9 per cent in May, an even bigger rebound than preliminary figures had suggested, after a fall of 17.7 per cent in April.

“Volatility of this nature is unprecedented in the 38-year history of the retail trade survey. No prior period even comes close,” Indeed economist Callam Pickering said.

The Australian Bureau of Statistics (ABS) found large recoveries in clothing, footwear and accessory sales (+129.2pc), as well as cafes, restaurants and takeaway food (+30.3pc).

However, the pick-up in sales in those industries came off large falls in April and remained well below the levels seen at the same time last year.

“The gradual easing of social distancing regulations and the reopening of physical stores bolstered retail trade in May,” Ben James from the ABS said.

“Retailers across a range of industries reported high numbers of consumers returning to stores, with some retailers noting levels similar to those seen in December.”

The reopening of stores also impacted the share of online sales, which accounted for 10.1 per cent of total retail turnover in May, down from 11.1 per cent in April but still well above the 6.2 per cent they accounted for in May last year.

US jobless rate improves

The US economy saw a record number of people hired last month as coronavirus restrictions were lifted across the country.

America’s unemployment rate fell to 11.1 per cent in June from 13.3 per cent in May as the economy reopened.

The data show 4.8 million people were hired over the month, the biggest monthly gain on record, as bars and restaurants starting trading again.

The labour force participation rate also rose to 61.5 per cent from 60.8 per cent as people resumed looking for work.

However, average hourly earnings declined 1.2 per cent, unwinding some of April’s 4.7 per cent gain.

Overall, the numbers from the US Labor Department were much better than forecast by economists.

Although, despite the hiring spree, the US labour market has still recovered only a fraction of the 22 million jobs lost in March and April.

The survey was also conducted before a resurgence of coronavirus cases late last month which saw new shutdowns.

That could bode badly for July, with surging COVID-19 cases in many US states and several states reversing or pausing reopening, leaving analysts worried about another sell-off in financial markets if the virus is not contained.

On Thursday, Florida reported a record 10,000 new cases of the disease, worse than any European country reported at the peak of their outbreaks.

Other figures showed claims for unemployment benefits rose 1.4 million last week, which was more than predicted.

It is the 15th week in a row where initial claims remain above 1 million and more than 31 million Americans are still collecting weekly unemployment checks.

Mike Bell, global market strategist at JP Morgan Asset Management in London, said it was too early to say that the worst of the economic damage from the coronavirus was over.

“The strong rebound would normally be an unambiguously positive sign that a recovery is under way, (but) it is being accompanied by a sharp rise in new infections, which was what caused the collapse in the first place,” he cautioned.

The much better than expected employment numbers saw US stocks rise again with the tech focused Nasdaq closing at a new record high ahead of the July 4 Independence Day holiday

The Dow Jones Industrial Average rose 0.4 per cent to 25,827, the S&P 500 gained 0.5 per cent to 3,130 and the Nasdaq Composite also added 0.5 per cent to 10,208.

Most sectors rose on the S&P 500 with miners making the biggest percentage gains.

Microsoft provided the biggest boost to the benchmark index and retained its top spot as the most globally invested in stock last month according to data from trading platform eToro.

Tesla shares jumped a further 8 per cent to $US1,208.66 after the electric car maker’s second quarter vehicle deliveries beat Wall Street estimates.

The electric car maker delivered 90,650 vehicles during the quarter, above estimates of 74,130 vehicles, according to Refinitiv data.

European stocks post stronger gains

Stocks rose in Europe as well ahead of the US jobs report, with the FTSE 100 index up 1.3 per cent to 6,240, the DAX up 2.8 per cent to 12,608 and the CAC 40 adding 2.5 per cent to 5,049.

The stock gains came despite a slight increase in unemployment in the eurozone from 7.3 per cent in April to 7.4 per cent in May.

The job losses were worst among women and young people, with Eurostat estimating that 16 per cent of young people were jobless.

Unemployment jumped in Italy in May, but fell sharply in France.

Spot gold rose by 0.3 per cent to $US1,775 an ounce.

Brent crude jumped 1.8 per cent to $US42.79 a barrel, boosted by the good US jobs numbers.

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