No change of PM this morning for Australia, global equities slightly lower, US unemployment rate rises but for good reasons, ASX futures 6 points higher

As you'll read across Australian press this morning in much more detail than I can deliver, a leadership spill has been voted down, which would have otherwise resulted in a contest between PM Tony Abbott and Communications Minister Malcolm Turnbull. Abbott has scored points by calling the party meeting one day early and this has saved him for now, but I wonder whether a leadership change is inevitable given Abbott's fairly desperate situation with regard to public popularity, which is dragging down the two-party preferred vote polling for the Liberal Party.

Comparisons can be drawn between New Zealand PM John Key (a very wealthy ex-Merrill Lynch executive) and challenger Malcolm Turnbull (a very wealthy ex-Goldman Sachs executive), and I suspect that if Turnbull one day emerges as leader then this transition would be seen as a pro-business move by corporate Australia, and a positive one by local and global investors. Despite harbouring policy ambitions that are shared with many in the opposition Labor Party, which makes him relatively unpopular within his own party, there is little doubt that Turnbull would have his finger on the pulse when it comes to the economy and what is required to drive it, given his entrepreneurial background. I think a Turnbull-led Liberal Party would need to align itself with elements of typically-Labor Party policies (because that's where he'll pick up the most votes) and Turnbull would have to move a little to the right in order to get party support. This would mean he'd have to put on a bit of an act to get through to the next election as leader, which would be a source of dissonance. Certainly wouldn't be the greatest way to kick off a Prime Ministership, especially as he hasn't been given the opportunity to market his policy intentions to the public. Labor voters seem to like Turnbull based on a gut feel that he could be a liberal (as opposed to Liberal) visionary who is not afraid to adopt bi-partisan political policy, but I wonder whether he'll be able to live up that and also enjoy Liberal Party support at the same time. For now, it seems he doesn't not have that support.

Elsewhere in the world, a very positive--yet slightly confusing--US employment report emerged on Friday night, with a larger than expected number of new jobs created, an upwardly revised previous figure and more US job seekers on the market. The lift in the number of new US citizens looking for work (over 700,000) moved the unemployment rate from 5.6% to 5.7%, which analysts did not focus on given the positive underlying dynamics that caused the shift. This positive jobs report was a short-term source of anxiety for equity investors, who fear a rate rise more than they did previous to the announcement. However, the small negative reaction on Wall Street was symptomatic of a fairly robust and upbeat mood among investors in general at present, a mood that would have also been buoyed by a 2.40% lift in WTI crude oil prices.

Australian investors have not been given a lot of direction this morning: equities falling lower is quite a US-centric issue; iron ore was higher Friday night; oil rising is a good thing for nerves; gold and silver had an off night; and the AUDUSD currency pair was knocked off its perch at the mid-US$0.78 level following the US jobs report, which strengthened the US dollar a little as a result of the positive news potentially fuelling the US Federal Reserve's conviction to raise interest rates this year.

Some pretty straight-forward charts this morning to kick off the week: ASX 200 still flying; the AUDUSD holding up relatively well considering last week's rate cut; and the S&P 500 struggling to break up through its January highs and still a good 40 points away from its December all-time highs.

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Upcoming economic announcements: Various Japanese economic announcements out at 10:50am, ANZ January job ads out at 11:30am, Japanese CPI out at 4pm, all Sydney time.


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