Drop in US jobless claims fuels market momentum

Published Mar 14, 2013 06:40pm

Traders work on the floor of the New York Stock Exchange. - AFP Photo/File

LONDON: Another drop in weekly US jobless claims helped sustain the optimism in markets on Thursday, particularly on Wall Street where the Dow Jones index was eyeing up its tenth straight day of gains.

The Dow has recorded a series of record closing highs after rising for nine straight sessions, its longest winning run since 1996.

Many stock indexes around the world have risen in the slipstream of the Dow's advance to multi-year highs, too.

''Not since the halcyon days of 1996 have we enjoyed such a long winning streak for the Dow,'' said Chris Beauchamp, market analyst at IG.

''Even the most bullish of analysts could now be forgiven for feeling a little nervous, with expectations of a pullback still widespread.''

However, figures showing that weekly US jobless claims fell by a greater-than-anticipated 10,000 to 332,000 helped sustain hopes over the US labor market and provided stocks with further momentum.

Also helping sentiment were lower than anticipated producer price inflation figures and an unexpected narrowing in the country's current account deficit.

In Europe, the FTSE 100 index of leading British shares closed up 0.74 per cent at 6,529 while Germany's DAX ended the day 1.1 per cent to 8,058.

The CAC-40 in France closed 0.9 per cent higher at 3,8671.

In the US, the Dow Jones industrial average was 0.4 per cent higher at 14,508 while the broader S&P 500 index rose 0.3 per cent to 1,560.

Much of the focus in the markets is on the S&P, which is a few points short of its 2007 all-time closing high of 1,565.

The rally in stock markets has been largely predicated on the assumption that the US Federal Reserve will for the foreseeable future keep interest rates at record lows and continue to pump money into the economy, so-called quantitative easing, or QE.

''It does seem that so long as the Fed is committed to QE, the markets may struggle to find a reason to start heading south,'' said Fawad Razaqzada, market strategist at GFT Markets.

Earlier in Asia, Japan's Nikkei 225 index rose 1.2 per cent to finish at 12,381.19, its highest close in more than four years, as investors anticipated parliament's approval of Haruhiko Kuroda as chief of the Bank of Japan.

Kuroda has been critical of the central bank's policies in the past and is thought to back Prime Minister Shinzo Abe's strategies for seeking to revive Japan's economy by fighting deflation through monetary easing and hefty government spending.

South Korea's Kospi added 0.1 per cent to 2,002.13 but stocks in Hong Kong rose 0.3 per cent to 22,619.18.

Trading in the currency markets was fairly light, with the euro up 0.4 per cent at $1.3007 and the dollar 0.2 per cent lower at 95.89 yen.

Oil markets were subdued too, with the price of benchmark New York crude up 28 cents at $92.80 a barrel.

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