Markets solid after drop in US jobless claims

In wake of more record highs on Wall Street, markets solid after fall in US claims data

Associated Press
US retail sales drop keeps markets in check

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Women walk past an electronic stock indicator in Tokyo, Thursday, April 11, 2013. Asian stock markets powered higher Thursday after a U.S. communications company posted a surprise jump in earnings that led to big gains in technology stocks and new highs on Wall Street. Japan's Nikkei 225 jumped 1.2 percent to 13,549.16. (AP Photo/Shizuo Kambayashi)

LONDON (AP) -- The mood in financial markets remained buoyant Thursday after an improvement in weekly jobless claims figures in the U.S. and as the main Wall Street stock indexes eyed new highs.

On Wednesday, both the S&P 500 and the Dow Jones hit all-time closing highs, giving a positive tone to trading in Asia and Europe. The indexes continued their march higher on Thursday, adding another 0.3 percent each.

A 42,000 drop in weekly U.S. jobless claims to 346,000 maintained the upbeat mood as U.S. trading got underway. The surprisingly big fall came after a run of disappointing jobs figures that had raised concerns over the pace of the U.S. economic recovery.

Jennifer Lee, senior economist at BMO Capital Markets, said the weekly fall suggests the "generally improving trend in the job market is continuing."

In Europe, the FTSE 100 index of leading British shares rose 0.5 percent to close at 6,416.14 while Germany's DAX rose 0.8 percent to 7,871.63. The CAC-40 in France gained 0.9 percent higher at 3,775.56.

Over the coming days, the focus will increasingly turn toward U.S. companies as they report first-quarter earnings. So far, the results have been mixed. On Friday, bank earnings will be in the spotlight with updates from JP Morgan Chase & Co. and Wells Fargo Bank.

Investors are also hoping that progress will be made in Washington toward a 2014 federal budget. President Barack Obama proposed a $3.8 trillion plan on Wednesday. Without a budget agreement, a huge array of government spending cuts — known as sequestration — will remain in place. Some economists believe the cuts are hurting growth and employment.

The solid tone in stock markets has helped shore up other supposedly riskier assets, such as the euro, which was trading 0.4 percent higher at $1.3122. The dollar shed some of its recent gains against the Japanese yen, trading 0.2 percent lower at 99.57 yen.

Japanese financial assets have been in the spotlight over the past week or so.

The Nikkei 225 in Tokyo jumped nearly 2 percent to close at 13,549.16, riding a wave of enthusiasm for the Bank of Japan's aggressive new approach to stimulating the world's third-largest economy out of a prolonged slump. That new approach has piled pressure on the yen. Just before the Bank of Japan's announcement, the dollar was trading at a little over 92 yen.

Elsewhere in Asia, South Korea's Kospi added 0.7 percent to 1,949.80, even though the Bank of Korea disappointed some analysts by keeping its key interest rate at 2.75 percent. Some were expecting the central bank would lower the rate to spark borrowing and help the economy.

In the commodity markets, oil prices were subdued, with the benchmark New York rate down $1.37 at $9.27 a barrel. More interest was on the price of gold, which slid 1.7 percent on Wednesday on speculation that Cyprus will sell 400 million euros of the precious metal as part of its financial bailout. On Thursday, an ounce of gold was up 0.4 percent at $1,565.70.

However, Julian Jessop, head of commodities research at Capital Economics, said there's plenty of room for the price of gold to rise, even if the Federal Reserve starts slowing down its stimulus program. That program has been adding to the amount of money in the financial system over the past few years, pushing some investors to buy gold as a reliable store of value.

Even gold sales from other eurozone are unlikely to significantly weigh on market prices, he said.

"If the crisis elsewhere in the eurozone escalates to the point where other, larger countries were desperate enough to consider selling their own gold, demand for safe havens would surely be so strong that there would be plenty of willing buyers — even at higher prices," said Jessop.

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