US jobs and China’s export growth

Friday 6 September 2013

Markets focus on the Senate Election; US jobs and China’s export growth

By Ric Spooner (Chief Market Analyst, CMC Markets)

The markets head into election weekend with a focus on the Senate and the potential impact of Fed tapering.

Markets are forward looking so it’s likely that investors have already built a Coalition win in the Lower House into valuations. The Senate result however, carries potential for significant uncertainty. A result which sees potential for a double dissolution and another election fought over the Carbon Emissions Trading Scheme would be a source of ongoing uncertainty and a likely negative for markets. Coalition control of the Senate would remove this risk and could well be a short term positive.

Gold and the US dollar were the centres of attention for international markets last night. An improving US Services PMI and better than expected Factory Orders saw investors increasing expectations that the Fed will begin to taper at its next meeting. Gold continued its downward correction and the lower opening by local gold miners this morning is likely to see this sector underperform today.

Both the US employment report tonight and China’s balance of trade figures over the weekend are likely to be a key focus for the market on Monday. An employment growth figure that is reasonably close to or better than consensus expectations of 180,000 should remove one of the last barriers to the Fed beginning its taper program in September. Another positive export growth figure by China would add to recent numbers suggesting continuing moderate expansion in international manufacturing.

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