ASX200 range holds after stronger AU jobs offset by softer China GDP
Tony Sycamore July 15, 2021 12:52 AM
A double header of sorts today for the ASX200 in the shape of Australian jobs data for June and China Q2 GDP, alongside June partials.
Consensus expectations heading into the labour market data were for employment to rise +25k and for the unemployment rate to fall to 5.0%. On both metrics the labour market exceeded expectations as the unemployment rate fell to a 10 year low of 4.9%, on a +29.1k rise in new jobs.
Offsetting some of the good news, hours worked fell by 8.4% in Victoria following its lockdown in June, an effect likely to be replicated next month in NSW, due to the current lockdown in Sydney. A rise in underemployment to from 7.4% in May to 7.9% in June, pushed the underutilisation rate higher from 12.5% to 12.8%.
All in all, a good set of numbers that at any other time would prompt the RBA to think about upgrading its unemployment forecasts. However, this is likely to depend on for how long Sydney remains in lockdown.
Turning now to China Q2 GDP which declined from a base effect distorted 18.3% rise in Q1, to a below consensus 7.9% in Q2. The softer Q2 number partially due to the resurgence in Covid in China that impacted catering, travel and entertainment.
The market is expected to look through the slowdown in Chinese growth, comforted by the PBOC’s recent dovish shift that included an increase in aggregate finance and a 50bp cut to the Reserve Requirement Ratio (RRR).
Since our last update in early July, the ASX200 has continued to consolidate the strong gains from the first half 2021, between 7400 on the topside and 7200 on the downside. This type of sideways price action is not uncommon at this time of the year as viewed in July 2017 and again in 2020.
As such, the view remains unchanged and we retain a preference to buy weakness in the ASX200 towards uptrend support coming 7100/7000 area.
Source Tradingview. The figures stated areas of the 15th of July 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.