Asian markets subdued as US jobs numbers come into focus James Packer buys more Crown shares

Asian and Australian stocks were lower ahead of the important US job number on Friday. Market consensus is for a number of around 70,000 new jobs but the range and variance among those polled is very large. Consensus in these types of situations can be a very misleading number.

We think the number is unlikely to be close to consensus and with prominent investment banks having downgraded their expectations over the past twenty four hours, there could be a reading closer to 40,000-50,000 jobs. A poor number might even see the market rally on hopes that QE3 will be implemented sooner than expected. Composition will be important and all eyes will be on the headline unemployment rate.

Politics continues to dominate the Australian trading session although the market is down in line with its regional peers. Speculation is rife that Prime Minister Julia Gillard is less likely to be the Labor leader at the next federal election than “any other candidate” among her parliamentary peers. The margin is slim but signals the change in mood among speculators over the past week.

We think politics are unlikely to influence the broad market mood for the time being with the exception on certain exposures – like Bluescope and Onesteel for example which would be disadvantaged under Gillard’s current carbon tax regime.

In other corporate news, media mogul James Packer increased his holdings in Crown Limited, purchasing around 8 million shares on market in recent days. Crown announced a reasonable profit last month and continues to invest in its portfolio of casinos, both in Australia and in Macau through its Melco joint venture. With an on-market share buyback already announced and Packer’s recent purchases, we think momentum around Crown will continue to build over the next few months as investors seeking simple business exposures.

Australian agribusiness group Elders has had its fair share of misfortunes over the past few years but it was good news today, announcing it successfully refinanced maturing debt on some favourable terms. The complicated consortium of lenders has been simplified with five banks.

Our thought is if Elders can manage to attract good terms, other companies in better shape should do even better. The announcement also signals to us a willingness by local banks to chase corporate lending growth as residential mortgage volumes continue to flatten. Companies will be mindful of GFC memories and seek reassurances around covenants and maturity. Overall though, the news is mildly positive for corporate borrowing costs and could even see the more optimistic players going out and pitching for merger and acquisition activity funded through local banks. Early days but worth keeping an eye on.