Meanwhile, the bourse operator – the Australian Securities Exchange – also lagged, falling 0.2 per cent after it wrote off the technology overhaul designed to replace its core trading service with a blockchain-based system.

The lowdown: The local bourse managed to keep its head above water on Thursday, enjoying a moment of relief following the release of strong employment data, and ending its three-day losing streak.

Despite a sour session overnight on Wall Street – weighed down by retailers and technology companies – the Australian sharemarket received a marginal boost from its national unemployment rate, which fell to 3.4 per cent. Employment rose by about 32,000, well-exceeding forecasts of about 15,000, and participation rates remained steady at 66.5 per cent, where expectations were at 66.6 per cent.

Senior investment advisor at Shaw and Partners Adam Dawes said the results were an indication of the job market’s ongoing buoyancy, which in turn would likely result in higher interest rates weighing on stocks until unemployment reached a more “comfortable” rate.

“The market did rally off the back of it when the data came out, but then realisation set it and it sort of came back a bit,” said Dawes. “We were probably expecting it to look a little bit better … It’s a certainty that interest rates are going to go up another 25 basis points in December.”

Dawes said Thursday’s positive session was an example of the local bourse “standing on its own two feet”, benefiting from a strong overnight performance from commodities (except lithium) since the local market is more commodity-centric compared to Wall Street. Any cool-down from materials shares, like BHP and South32, was also welcome, said Dawes, because such developments helped commodities cycle even higher.

Wednesday’s third-quarter wage price index increased by 3.1 per cent year-on-year, 0.1 per cent more than forecast, with wages lifting by 1 per cent in the third quarter alone. According to ANZ foreign exchange strategist and macroeconomist John Bromhead, this data should “not alarm” the Reserve Bank; however, it would likely make a December pause in rate hikes unlikely.

“Wage gains in Australia remain relatively subdued and are not at levels that would see the RBA fret about a wage-price spiral developing. But they are rising,” Bromhead said.

Elsewhere, October US retail sales rose by 1.3 per cent month-over-month, exceeding expectations of a 1 per cent rise, and jumping significantly from the zero per cent level in September.

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“The data points to still-strong consumer demand, which is something that the Fed is trying to reduce via its rapid monetary tightening,” said Bromhead. “The data justifies a 50 basis point rate increase from the Fed in December.”

After softer-than-expected US inflation data triggered a rally in the market last week, strong retail sales numbers – which showed resilience in spending – have burst investors’ optimistic bubble.

Commentary from the Fed overnight generally provided little support for investors hoping for a pivot any time soon, according to NAB economist Taylor Nugent. Governor Christopher Waller suggested the FOMC would consider slowing the pace of hikes, but emphasised that they would still need to monitor any shifting data closely before making promises regarding the size of cuts.

Meanwhile, Republicans won the US House of Representatives by a slim margin, offering a hint of political “gridlock” that could slow any sweeping legislation on Biden’s agenda and therefore boost stability within global markets.

The local dollar weakened by 0.4 per cent to 0.6728 US cents. Although lower, this was still about 5 per cent higher than levels seen prior to US CPI data released last week.

Tweet of the day:

Quote of the day: “Vacation’ is a strong word. For me, it’s an email with a view,” said Elon Musk, the world’s richest person, while testifying in the Delaware Chancery Court over his hefty compensation package at Tesla Inc., which was approved in 2018, and valued at approximately $55 billion. This was in response to questioning from a plaintiff’s lawyer regarding his relationship with Tesla board member James Murdoch (the younger son of News Corp founder, Rupert Murdoch), with whom he has occasionally vacationed with.

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