ASX tumbles 0.6pc in worst day of 2020 after jobs shock

ASX tumbles 0.6pc in worst day of 2020 after jobs shock

The Australian stockmarket posted its weakest session of 2020 after stronger than expected jobs data slashed the odds of a rate cut in February. 

The S&P/ASX200 Index slipped 44.7 points, or 0.6 per cent, to 7088, snapping a record breaking run that had pushed the benchmark to fresh highs in six of the past seven sessions. 

The market was pushed into the red early in the session after contractor CIMIC unveiled a $1.8 billion writedown on its BIC Contracting business and contractor Downer EDI cut its full year profit guidance by $65 million to $300 million. 

CIMIC shares finished 19.9 per cent lower, while Downer EDI shares tumbled 18.1 per cent. Both stocks were the biggest points detractors from the S&P/ASX200 Index.

The market selloff accelerated after the 11.30am AEDT release of the December jobs report, with the better than expected jobs creation torching hopes of a 0.25 per cent rate cut at the Reserve Bank of Australia’s February 4 meeting. 

The Australian economy added 28,900 jobs in December, pushing the unemployment rate down to 5.1 per cent.

Consensus forecasts had pointed to the creation of 10,000 new jobs – after a rise of 39,900 in November – and the unemployment rate to remain steady at 5.2 per cent.

Commonwealth Bank, Citi and UBS abandoned their forecasts for a February rate cut, though they all expect further rate cuts this year. 

Leading blue chips paced the market’s broad-based losses. 

CSL fell 0.4 per cent, Woodside lost 1.6 per cent and Woolworths shed 0.9 per cent. 

Westpac, which appointed former ANZ CEO John McFarlane as its new chairman, fell 0.2 per cent. 

The three iron ore major also went in reverse. BHP dropped 0.3 per cent and Rio Tinto lost 1.1 per cent.

Fortescue Metals Group snapped a five day streak of consecutive record highs, dropping 1.3 per cent. 

Telstra was among the blue chip winners with a gain of 0.3 per cent. 

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