A strong US job market is bringing more volatility and pain to Australian investors, as local fund managers say recent economic data leaves no doubt that the Federal Reserve will maintain a robust approach to raising interest rates.
Wall Street fell on Friday after monthly nonfarm payroll data for September showed that while job growth was slowing, the number of new jobs rose faster than the market had expected. The unemployment rate in the United States has fallen to 3.5 percent.
Wall Street fell on recession fears on Friday after jobs data was stronger than expected. attributed to him:Bloomberg
The numbers reinforced investor fears that the US central bank has no choice but to continue raising interest rates in an attempt to curb inflation – a move that could lead the nation into recession.
Domestic fund managers say Australian investors must now contend with the possibility that good economic news, such as strong jobs data, means tough conditions for stocks.
“The US job market is like Rocky Balboa right now — it’s taking all the punches from the Fed but it’s not going to hit the plate yet,” co-founder and senior portfolio manager at Ophir Asset Management Andrew Mitchell said.
“There was nothing in Friday’s employment data to stop them from delivering another massive 0.75 percent increase in rates. This just adds to more downward pressure on the Australian dollar against the US dollar and flows from this domestically imported inflation.”
The Australian dollar was sitting at 63.91 US cents on Sunday morning, down 6.7 percent from the month.
The ASX200 rose last Tuesday after the Reserve Bank of Australia missed expectations with a 25 basis point increase in the liquidity ratio.
Australian Eagle Asset Management chief investment officer Sean Squeira said data seen in the US last week would mean “general volatility will remain elevated for some time” domestically.
Originally published at Melbourne News Vine
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