The ASX 200 Index retreated for the third consecutive day after the Australian Bureau of Statistics (ABS)published weak jobs numbers and the Federal Reserve slashed interest rates for the first time this year. It dropped to $8,777, down from the year-to-date high of $9,053.

Australia’s jobs data raise odds of rate cuts

The ASX 200 Index, which tracks the biggest Australian companies, retreated after the latest Australian jobs date. The economy lost 5.6k jobs during the month after it created 26.5k in July. These numbers were much lower than the median estimate of 22,000.

The report also showed that full-time employees plunged during the month. Australia lost 40,000 full-time employees after creating 63,000 of them in the previous month. Again, this figure was much lower than what analysts were expecting.

The decline in full-time workers was offset by an increase in part-time workers, who jumped by over 35,000. Also, the labor participation rate retreated to 66.8, while the unemployment rate remained unchanged at 4.2%.

These numbers means that the economy is not doing well, possibly as companies adjust to the new tariff regime and weak demand from China.

On the positive side for the ASX 200, the data means that the Australian central bank will cut interest rates in its meeting later this month. This explains why the country’s bond yields slipped, with the 10-year falling to 4.21% and the five-year falling to 3.624%.

Top ASX gainers and laggards

Paladin Energy stock price jumped by 4%, making it the best-performing company in the ASX 200 Index. The decline happened a day after the company raised A$300 million on Wednesday in an equity fundraising.

The other top gainers in the index were firms like Hub24, Neuren24, DroneShield, and Pinnacle Investments.

On the other side, the top laggards were companies like Santos, Woodside, Magellan Financial, and Beach Energy. 

Santos stock plunged by over 11% after a takeover by ADNOC failed, in which was the third failed attempt for the company in the last 7 years. ADNOC had proposed buying the company in a $18.7 billion, which was the biggest buyout of an Australian company in years.

Federal Reserve interest rate cut 

The ASX 200 Index retreat also mirrored that of American indices like the Nasdaq  and the S&P 500 Index, which slipped after the Federal Reserve slashed interest rates.

The Nasdaq 100 and the S&P 500 Index fell by 0.10% and 0.33%, respectively after the Federal Reserve cut. These declines happened because the cuts were in line with what analysts were expecting, meaning that they were priced in already.

In a statement, the Fed decided to cut rates by 0.25%, and hinted that it will deliver more cuts in the upcoming meetings to cushion the economy from the ongoing slowdown.

ASX 200 Index analysis 

ASX 200 chart | Source: TradingView

The daily timeframe shows that the ASX 200 Index retreated from the year-to-date high of $9,057 on August 26 to the current $8,764.

Data shows that the index settled at the 50-day Exponential Moving Average, while the two lines of the MACD are attempting to move below the zero line. Also, the Relative Strength Index has moved below the neutral level of 50.

Therefore, the index will likely remain under pressure for a while and then rebound later in October. In this scenario, it will drop to $8,000 and then rebound to the all-time high of $9,057.

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