Markets Live: Jobs shock, Rio delights

CBA, ANZ and NAB weighed heaviest on the market, dropping by between 0. 4 and 0. 5 per cent. QBE fell 1. 2 per cent, while Cochlear gave up some of its recent gains to finish 4 per cent lower. BHP advanced 0. 4 per cent and Newcrest 5 per cent as miners helped limit the market’s losses. Rio was 0. 8 up ahead of its interim results, which are out as we type. Downer climbed 4. 7 per cent, while Tabcorp added 3. 2 per cent on its earnings results. 4:06pm: The highest Australian unemployment rate in 12 years has brought forward bets on an interest rate cut by the Reserve Bank as traders increasingly believe the economy will need a stimulus.

Such promises will be difficult to keep if slower growth, which usually translates into higher unemployment and lower corporate profits, leads to more meager tax receipts. 9:13am: Local shares are set to open weaker on a flat lead from Wall Street amid offsetting positive and negative corporate news and heightening tensions between Russia and Ukraine, with gold rallying. • On Wall St, S&P 500 flat, Dow +0. 1%, Nasdaq +0. • In Europe, Euro Stoxx 50 -0. 7%, FTSE -0. 7%, CAC -0. 6%, DAX -0. • Spot gold rose $US17. 57 to $US1306. • Brent oil up 8 US cents to $US104. • Adelaide Brighton cut to neutral v overweight at JPMorgan; price target $3. • Caltex Australia rated new overweight at JPMorgan; PT $27. • CIMB has an “add” recommendation on Telstra and a $5. 73 target price.

Chase Carey, Fox’s president and chief operating officer, underlined Mr Murdoch’s comments, telling investors: “Let me be clear: we are done”. ‘Walked away': Rupert Murdoch says the Time Warner bid is over. 10:33am: Consumer and business financier Flexigroup has hit its full year guidance of $85 million cash net profit, up 18 per cent compared to 2013.

The biggest growth has come from its recently acquired Lombard and Once interest free cards offered via retailers, with profits jumping by 307 per cent to $11 million, with sales up 127 per cent to $200 million. Flexigroup shares are 0. 8 per cent higher at $3. 80. 10:23am: Shares have opened higher, shrugging off heightened risk aversion globally as miners push the market up ahead of Rio’s interim results late this afternoon.

Kostin reckons that if that happens, it should translate to “dramatically greater returns for stocks versus bonds in the next several years” as the interest rate environment starts to return to more normal settings moving towards 2018. “The S&P 500 will generate an annualised total return of 6 per cent between now and 2018 when Fed funds reach a “neutral” level of 4 per cent,” said Mr Kostin in a note to investors. “We assume a neutral Fed funds rate will be reached in 2018, and 10-year Treasuries will yield 4. 5 per cent.

Gold miners are enjoying the boost in the price of the precious metal overnight, with Newcrest 3. 1 per cent higher. Tabcorp has jumped 2. 9 per cent on its earnings result this morning. 10:09am: The co-founder of SocietyOne, a peer-to-peer start-up wooed by Kerry Stokes and James Packer, has launched an internet shopping site designed to use group buying and imports from Hong Kong to undercut local retailers.

Prices jumped 70 per cent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs at an all- time low. 9:28am: Gaming and wagering company Tabcorp has reported a 2. 6 per cent rise in net profit to $129. 9 million, which was dragged down by a $19. 5 million levy related to its previous operation of poker machines in Victoria.

Rio shares are trading 0. 3 per cent higher at $66. 04. 1:41pm: Expectations of a rate increase in the United States are now firmly being factored into the investment horizon of many portfolio managers - and so too is a view that stocks should outperform bonds for another three years before hitting a wall, says Goldman Sachs.

The dollar has dropped on much worse than anticipated jobs figures. 11:35am: Australia‘s unemployment rate has jumped to 6. 4 per cent in July, according to the ABS, well above consensus forecasts of 6 per cent.

Read more here: SMH


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