With all the bearish news in recent months, it's easy to lose sight of the positives that emerged post the pandemic. Australian labour force data released this morning showed the unemployment rate fell to 3.9%, its lowest level since the 1970s.
Although the economy added only 4k jobs, less than the 30k expected, a slight fall in the participation rate from 66.4% to 66.3% helped the unemployment slip below the magical 4% level.
The underemployment rate, which measures those with jobs but wish to work more hours, fell to 6.1% after being as high as 13.1% just 24 months ago, shortly after the onset of the pandemic.
The news comes at a good time for the Coalition as it continues to close ground in the run into this weekend's Federal Election. After starting the week as outsiders and priced at over $4.00, betting markets show that the race has narrowed considerably, with the LNP now paying $2.65.
Recession fears may be helping the LNP's chances, but regardless the market has not been overly concerned about an ALP victory. The main risk remains a hung parliament locally, and fears of an imminent recession in the U.S as the Federal Reserve and other central banks focus on taming inflation. As Powell said earlier this week, "restoring price stability is a nonnegotiable need".
Nonetheless, the ASX200 has found some relief following the jobs data release. After falling 2% on the open following a weak lead from Wall Street, the ASX200 is currently trading 1.42% lower at 7080.
Over the past fortnight, the ASX200 has followed the road map almost to the T. After hitting our 7000/6950ish downside target last week, we called for a recovery towards 7200, a level it tagged yesterday.
Technically, a final leg lower towards range lows 6950/6750 is needed. However, whether that plays out will depend on this weekend's Federal Election outcome.
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