Australia Market falls on RBA rate hike concerns

The Australian share market finished session lower on Thursday, 16 December 2021, as more than expected decline in Australia's jobless rate in November renewed bets on an earlier official interest rate rise than has so far been flagged by the Reserve Bank of Australia. However, market losses capped after the U.S. Federal Reserve announcement to end bond-buying stimulus in March and likely setting up three interest rate increases next year to tackle heated inflation.

At closing bell, the benchmark S&P/ASX200 was down 31.42 points, or 0.43%, to 7,295.66. The broader All Ordinaries index sank 17.78 points, or 0.23%, to 7,618.46.

 

The top performing stocks in this index were MESOBLAST and WISETECH GLOBAL, up 10.9% and 6.9% respectively. The bottom performing stocks in this index were CSL LIMITED and CHAMPION IRON LIMITED, down 8.16% and 6.00% respectively.

Total 6 of 11 sectors were lower along with the S&P/ASX 200 Index. Information Technology was the best performing sector, gaining +2.07%, while healthcare was the worst performing sector, falling 5.07%.

Australia's unemployment rate came in at 4.6% in November, a 0.6 percentage point improvement on the October figures, with 366,100 jobs added, rising bets on an earlier official interest rate rise than has so far been flagged by the Reserve Bank of Australia.

The country's central bank governor said the Reserve Bank of Australia will not increase interest rates until actual inflation is sustainably in the 2% to 3% target range that is unlikely to happen next year. But, the central bank is prepared to taper, or potentially cease, its bond purchases next year if the economic recovery is in line with the Reserve Bank Board's goals, and it may happen as early as February.

Biotech giant CSL shares plunged on resuming trade after two days of suspension on announcing a discounted A$5 billion placement to fund the A$11.7 billion acquisition of Swiss drugmaker Vifor Pharma.

ECONOMIC NEWS: Australia Jobless Rate Falls To 4.6% In November- Australia jobless rate came in at a seasonally adjusted 4.6 percent in November, the Australian Bureau of Statistics said on Thursday, down sharply from 5.2 percent in October. The Australian economy also added 366,100 jobs last month following the loss of 46,300 jobs in the previous month. The participation rate was 66.1 percent and up sharply from 64.7 percent a month earlier.

Australia Markit Manufacturing PMI Decelerates In December - Australia manufacturing sector continued to expand in December, with a manufacturing PMI score of 57.4, the latest survey from Markit Economics showed on Thursday. That's down from 59.2 in November, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services index eased to 55.1 in December from 55.7 in November, while the composite dipped to 54.9 from 55.7 a month earlier.

CURRENCY NEWS: The Australian dollar rose on speculation that the Reserve Bank of Australia would raise interest rate earlier than has so far been flagged. The Australian dollar changed hands at $0.7173.

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