Business News

Jobs beat Japan

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by Peter Switzer

A better-than-expected jobs report helped Wall Street up but the Yanks found a reason to be a tad negative. The worries about a rising oil price thanks to Libya and concerns about radiation coming out of Japan’s nuclear crisis still couldn’t top the positiveness from the latest take on US employment.

The S&P 500 rose 18.61 points this week, or 1.4 per cent, and is up 4.2 per cent in two weeks. And the spook reading — the VIX or fear index — is under 18, which means the investors are relaxed with their positions in this bull market.

By the way, recent history shows April has been good for investors. A strong first quarter with a rise over five per cent is a good omen for April and for the rest of the year. When this happens, history since 1987 says the market has risen by more than 16 per cent for the year!

The US jobs front

On the jobs front, 216,000 jobs were created in March and the jobless rate fell to 8.8 per cent. This is a long way from the doom and gloom preached by double dip recession ‘experts’ when unemployment was 10.1 per cent last year.

The next anxiety point for investors will be when will the Fed end QE2? And will interest rates go up? This could mean a short-term dive but the fact the Fed decides to raise rates will mean that the patient — the US economy — no longer needs life support. That should help stocks.

The price of oil is another market concern and when the Libyan rebels start to lose, the price of oil goes up and vice versa. A higher price will hurt stocks as it undermines the comeback of the US consumer.

Ahead this week

For the week ahead in the US, I will be watching a Bernanke speech on Monday, a services sector report and the minutes from the interest rate meeting on Tuesday and US chain store sales and interest rates decisions in the UK and Europe on Thursday.

On the local front, the following is what could set market tongues wagging and share prices moving.

Monday, it’s job advertisements and then on Tuesday the Reserve Bank Board meets but no change is expected but the language will be looked at closely. Come Wednesday we see housing finance for February and good news isn’t expected due to the floods in Queensland. But Thursday is the big day with the latest unemployment number out.

A good number will get the urgers out for an interest rate rise and could push the dollar even higher!

I want a go-nowhere number so the Reserve Bank stays on the sidelines for a long, long time — the non-mining part of the economy needs a break!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Monday, April 04, 2011

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