The S&P/ASX 200 Index (ASX: XJO) is pushing higher on Thursday after a surprise jobs report changed the interest rate debate.
At the time of writing, the ASX 200 is up 1.66% to 8,637.8 points.
The move comes after Australia's labour market showed more weakness than economists had expected.
Instead of adding jobs in April, the country recorded a fall in employment. The unemployment rate also jumped to its highest level since late 2021.
So, does that mean the Reserve Bank of Australia (RBA) still has enough reason to raise interest rates again?
Here are the key numbers from today's jobs report.
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The jobs numbers behind the move
According to the Australian Bureau of Statistics (ABS), employment fell by 18,600 people in April to 14.74 million.
The unemployment rate rose from 4.3% to 4.5%, while the participation rate eased to 66.7%.
Full-time employment fell by 10,700 and part-time employment was down 7,900. But hours worked still rose by 15.8 million hours, or 0.8%, over the month.
While the employment numbers were weaker than expected, the rise in hours worked suggests businesses are still leaning on their existing staff.
Why June now looks less certain
The RBA lifted the cash rate by 25 basis points to 4.35% at its May meeting, marking its third and painful hike of 2026.
The central bank is still trying to bring inflation lower while keeping the jobs market as strong as possible.
Before today's data, investors were still weighing up whether another rate hike could arrive as soon as June.
But today's weaker jobs report makes that harder to call.
Reuters reported that market pricing for a June rate hike fell after the data, with traders seeing a lower chance of the RBA moving again next month.
Australian bond yields also moved lower, while the Australian dollar weakened after the report was released.
Furthermore, the ASX 200 has also risen as investors price in a lower near-term risk from higher interest rates.
Foolish bottom line
A lower chance of a near-term rate hike can support the share market because it reduces some pressure on valuations.
It can also help rate-sensitive parts of the market, including property stocks, infrastructure, and consumer-facing companies.
But investors are not getting off that easily.
Inflation is still above the RBA's target band, and energy prices remain a risk. The RBA may decide the labour market has softened enough to wait, but it's unlikely to declare the inflation fight is over.
Some economists still expect another hike later this year. Others now see the RBA staying on hold for a bit longer.
