Monday, 14 May 2012
Major share markets finished the week lower as Europe struggled with political uncertainty and data showed China’s economy continues to slow.
The Australian share market was not immune to the turbulence overseas and finished the week down 2.5%. Jobs data released last week showed a surprise fall in the unemployment rate from 5.2% to a one-year low of 4.9%. There was weakness in the figures though, with the jobs gained during the month due to the creation of new part time roles and a fall in the participation rate. Last week also saw the Labor Government hand down its fifth budget, which focussed on families and delivered a $1.5 billion surplus.
Investors were rattled as voters in France and Greece challenged austerity as the Euro zone’s sole solution to the debt crisis. The uncertainty intensified as attempts in Greece by both the centre-right New Democracy party and the far-left group Syriza have so far failed to form coalition governments.
In the US, markets began the week positively only to finish lower due to the European uncertainty and after JP Morgan disclosed a US$2 billion trading loss on a failed hedging strategy. The latest data from China indicated its economy is continuing to slow, raising the prospect of monetary policy easing. Reports showed China’s export and import growth slowed during April. The data also revealed factory output, retail sales and consumer price growth all slowed during April.
Looking at the markets, the ASX 200 finished the week at 4,285 points, down 2.5%. The Dow Jones finished the week at 12,821 points, down 1.7%, and the S&P 500 finished the week at 1,353 points, down 1.2%.
The Australian dollar finished the week lower at 100.6 US cents, down 1.3%. Oil traded lower to finish the week at US$96.13 per barrel, down 2.4%, while Gold also finished lower at US$1,579.35 per ounce, down 3.8%.