Market up on Bernanke comments and jobs data

Market up on Bernanke comments and jobs data

By William Leys (Premium Client Manager, CMC Markets)
11 July 2013

The Australian market is sharply higher at midday, as investors consider the latest comments from the Fed’s Dr Bernanke as well as the release of local jobs data.

In the US overnight, the focus shifted back to the Federal Reserve and its QE taper conundrum. Firstly, there was the release of the FOMC minutes from the policy board meeting three weeks ago, which suggested that around half of the board members wanted bond buying to be wound up by the years end. This didn’t come as a great surprise but didn’t exactly inspire the market either, with Wall Street closing flat. However in contrast, the tone of Bernanke’s address following the close was markedly dovish. He reinforced the need for an ‘accommodative policy in the foreseeable future' which evidently pleased the market with US futures gaining around 100 points after the fact.

This positive momentum provided a boost for the local market, with the ASX200 adding around 1% in the morning. Consideration is now being given to the latest jobs data. The unemployment rate has come in at 5.7%, marginally higher than expected. However, 10,300 new jobs were added which was significantly better than expectations. Overall, the data may be considered moderately positive but so far it hasn’t really changed the current trajectory of the index. Perhaps yesterday’s weak Chinese data is still weighing on investors’ minds.

The combination of a dovish Fed tone overnight and solid local economic data is also pushing the AUD higher. The local unit is currently trading around 0.925 against the greenback.

www.cmcmarkets.com

ENDS

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