The ASX fell today.
The S&P/ASX200 dropped 17.30 points or 0.24% to 7,106.20. Over the last five days, the index has gained 0.56%, but is down 4.55% for the last year to date.
The worst performing stocks in this index are Codan (ASX:CDA) Ltd, down 10.43%, and Regis Resources Ltd (ASX:RRL), down 8.95%.
On the flipside, coal stocks enjoyed a good run today as the European coal price jumped.
"Coal prices soared, with the European coal benchmark API2 rising 7% to US$380 a tonne as utilities increasing burn the fuel to fill gaps left by the reduce supply of gas from Russia," ANZ commodity strategist Daniel Hynes said.
"Concerns are being partially countered by storage sites continuing to be replenished using imported LNG. European facilities are now 75% full.
"However, gas supplies would last less than three months this winter if Russia totally cuts off supply, even if they are able to fill storage facilities to 95% capacity by November, warned German’s energy regulator."
The coal stocks that thrived included New Hope Corporation Ltd, which hit a nine-year high of $4.77 after jumping 4.3% before retracing to 3.7%. Whitehaven Coal Ltd hit a 15-year high of $7.09 up 4.6% before finishing at 2.43%.
In the news today
Jobs, jobs, jobs
The Australian Bureau of Statistics released its labour force numbers today.
The findings show Australia's unemployment rate fell to a record low of 3.4%, beating the July 3.5% expectation.
The labour force participation rate fell to a three-month low of 66.4% compared with expectations it would stay at the record high of 66.8%.
Meanwhile, employment fell 40,900 compared with an expected rise of 25,000: full-time employment was down 86,900 and part-time jobs were up 46,000.
"The fall in unemployment in July reflects an increasingly tight labour market, including high job vacancies and ongoing labour shortages, resulting in the lowest unemployment rate since August 1974,” the ABS stated.
Influencing the numbers were school holidays, worker absences associated with COVID and other illnesses and flooding events in New South Wales.
"This is the first fall in employment since October 2021, following the easing of restrictions after the Delta lockdowns in late 2021," the ABS added.
“During the pandemic, it has not been uncommon to see larger-than-usual changes or slowing in employment and hours around school holidays."
Looking at underemployment, the rate decreased by 0.1 percentage points to 6.0%, while youth underemployment increased by 0.1 percentage points to 14.1%.
The underutilisation rate, which combines the unemployment and underemployment rates, fell by 0.2 percentage points to 9.4%, its lowest level since April 1982.
Tony Sycamore, Market Analyst at City Index, said of the AU July jobs report and the RBA’s response: “The Australian jobs report for July has provided a messy mix.
"The unemployment rate fell to a 48-year low of 3.4%, despite the economy shedding 40,900 jobs, snapping a run of eight consecutive months of gains.
“Behind the fall in the unemployment rate from 3.5% to 3.4%, the participation rate defined as the percentage of people in the working-age population in the labour force declined from last month’s record high of 66.8% to 66.4%. This means fewer people were looking for jobs.
“As noted in the ABS media release, the July reference period coincided with the winter school holidays, worker absences associated with COVID and other illnesses, and other flooding events in New South Wales.
“In terms of other details, labour market capacity as defined by the underutilization rate fell 0.2 pts to 9.4% to its lowest level since 1982. The underemployment rate, which measures the number of people who hold a job but want more hours decreased by 0.1% to 6% and is now 2.3 pts below where it started the year.
“Holiday distortions aside, the fall in the unemployment rate to 3.4% reflects a tight labour market, supported by still high job vacancies and reports of ongoing labour shortages. All of these will flow into a lower unemployment rate, higher wages, inflation and inflation expectations.
“As a result, the RBA will likely raise rates by 50bp at its meeting in September, which would take the cash rate to 2.35%, near the nominal neutral rate of around 2.5%.
“The RBA have already delivered 175 basis points (bp) worth of hikes since May, the risk is that the RBA may opt for a more modest 40bp or 25bp rate hike. The interest rate market is 100% price for a 40bp hike.”
One final comment from Anneke Thompson, CreditorWatch chief economist: "Today’s labour force data continued to underline just how tight the Australian labour force is. There are now fewer unemployed people than there are jobs available in Australia.
"However, looking beyond the raw unemployment rate, 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. The reason the unemployment rate also dropped, was that the participation rate also declined.
“Participation has been at record high levels, so some levelling off is not surprising. Still, a drop in employment could mean that businesses are starting to prepare their workforce make-up in anticipation for leaner times ahead.
“CreditorWatch BRI data for June 2022 forecasts that the small business default rate is due to climb to around 5.8%. That is about 1 percentage point higher than where it sits today. Ironically, a tight labour market is driving up the cost of employing people, and this is feeding into the distress of some businesses, particularly in the food and beverage sector.
"This is typically a labour-intensive market and any movement in labour costs has an outsized impact. This is one of the reasons that his sector has the highest probability of default of all industries. At 7.1%, this rates well above the average of all sectors, which is 4.8%."
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