US jobless claims fall shores up markets

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MarketsEuropean stock markets and Wall Street futures recouped earlier modest losses Thursday after a surprise fall in weekly U.S. jobless claims.

Asian markets had earlier rallied as investors played catch-up with Wednesday’s rises in Europe and the U.S.

In Europe, the FTSE 100 index of leading British shares was up 3.7 points, or 0.1 percent, at 5,370.11 while Germany’s DAX was up less than a point at 6,084.41 points. The CAC-40 in France was 7.22 points, or 0.2 percent, higher at 3,631.06.

U.S. stocks are poised for a modest advance at the open — Dow futures were up 9 points, or 0.1 percent, at 10,281 while the broader Standard & Poor’s 500 futures rose 1.2 point to 1,082.90.

The fairly steady tone in European and U.S. stock markets was replicated in the currency markets too.
The dollar was 0.2 percent lower at 84.28 yen, while the euro was up 0.3 percent at $1.2841.

Sentiment in the markets, which was buoyed Wednesday by a strong U.S. manufacturing survey from the Institute for Supply Management survey, was helped further by a surprise fall in weekly jobless claims — the Labor Department said the number of people requesting unemployment benefits declined by 6,000 to a seasonally adjusted 472,000, in contrast to expectations for a modest increase.

The jobless claims data have helped to shore up confidence over Friday’s closely watched U.S. nonfarm payroll figures for August. The payrolls data often set the market tone for a week or two.

Anything particularly weak could affect whether the Fed decides to introduce additional stimulus measures.

At the moment, market consensus is that around 90,000 U.S. jobs were lost in August, but that 30,000 were added if government census jobs that ended are taken out of the equation. Meanwhile, the U.S. unemployment rate is expected to hold steady at 9.5 percent or even rise to 9.6 percent.

Though September started solidly in the markets following a disappointing August, investors remain cautious heading into the payroll data.

“The risk is that tomorrow’s U.S. jobs report provides a ‘slap in the face’ should the unemployment rate rise sharply,” said Neil MacKinnon, global macro strategist at VTB Capital.

The monthly interest rate decision by the European Central Bank had little impact. As expected the ECB kept its key interest rate unchanged at 1 percent. However, the bank surprised by upgrading its eurozone economic growth forecasts for 2010 and 2011 — most economists had only been anticipating an upward revision for this year only.

Investors are keeping a close watch on European Central Bank President Jean-Claude Trichet as he fronts his usual press briefing following the interest rate decision.

“Any hints over policy from the ECB will be closely followed,” said Will Hedden, sales trader at IG Index.

Earlier in Asia, Japan’s Nikkei 225 stock average gained 1.5 percent to 9,062.84, while Hong Kong’s Hang Seng index rose 1.2 percent to 20,868.92 and Seoul’s Kospi advanced 0.6 percent to 1,775.73.

Australia’s S&P/ASX 200 added 0.8 percent to 4,532.70 after gaining 2.1 percent the day before on the country’s strongest economic growth figures in three years.

Benchmark crude was down 66 cents at $73.25 a barrel in electronic trading on the New York Mercantile Exchange.

Associated Press writer Kelly Olsen in Seoul, South Korea, contributed to this report.

Source: The Associated Press.