Australian 1-year bond yields sank below the cash rate after soft US retail sales preceded a weak December jobs report, prompting a shift in rate-rise expectations.
Shares posted their tenth gain in 12 sessions, climbing to a nine-month closing high after a weaker-than-expected jobs report prompted bond and equities traders to cut expectations on the pace of future interest rate rises.in December, the Australian Bureau of Statistics said. That was well below economists’ expectations for a gain of 22,500 positions, and below the three-month trend of 38,100 jobs added. The data followed weak US retail sales overnight as traders moved to reprice risk assets.
AMP Capital’s Shane Oliver said the 1-year bond rate falling below the cash rate suggests the bond market expects cash rates to be similar or lower this time next year.“An interpretation of that is in a year’s time the cash rate will be below where it is now, said Shane Oliver the chief economist at AMP Capital.
Among the worst-performing sectors was energy, as oil prices retreated. Benchmark Brent crude futures eased 1.3 per cent to $US78.74 at the closing bell to drag the sector 0.7 per cent lower. Shares in oil and gas giant Woodside lost 0.6 per cent, with Santos off 1.6 per cent.The best-performing stock on the benchmark index was Nanosonics. Shares in the healthcare disinfectant business jumped 8 per cent, after management said it expects pre-tax profit of some $11.
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