The dollar rose and global stocks edged higher, led by gains on Wall Street, after weekly US jobless claims data suggested an improving labour market, though investors kept an eye on the ongoing impasse in budget and debt negotiations in Washington.
The Dow and benchmark S&P 500 index snapped a five-day losing streak after the Labour Department said the number of Americans filing new claims for unemployment benefits fell last week to near a six-year low.
The data eased some concerns about the US economy that were spurred by the Federal Reserve’s recent decision to keep its stimulus program intact, to the surprise of many investors. Indeed, the jobs data could support the Fed’s plan to begin winding that programme down.
Also yesterday, the US government left its estimate for economic growth in the second quarter unchanged at 2.5 per cent.
A measure of global equity markets, MSCI’s all-country world index traded near break-even, up 0.01 per cent, while the FTSEurofirst 300 index of leading European shares closed up 0.05 per cent at 1,257.53.
On Wall Street, the Dow Jones industrial average was up 19.27 points, or 0.13 per cent, at 15,292.53.
The Standard & Poor’s 500 Index was up 1.07 points, or 0.06 per cent, at 1,693.84. The Nasdaq Composite Index was up 17.73 points, or 0.47 per cent, at 3,778.83.
The dollar advanced as the euro was hurt by political uncertainty in Italy. The euro was down 0.35 per cent at $1.3478. Against the yen, the dollar was up 0.4 per cent at 98.81 yen.
But the dollar’s gains and the jump in US stocks are expected to be limited because the impasse in congressional negotiations over increasing the federal borrowing limit could lead to a possible US debt default.
Republicans and Democrats also are at odds over passing other legislation to provide stop-gap funding for federal agencies that would avert a government shutdown on October 1.
House of Representatives Speaker John Boehner urged his caucus yesterday to show flexibility over a measure to keep the government open, a fellow Republican said.
Lawmakers have given themselves very little time to come up with an agreement, said Art Hogan, managing director at Lazard Capital Markets in New York. “I hope it doesn’t take a big (market) slide to get them to say ‘this is what happens when we mess up,’” Hogan said.
US Treasuries prices slipped on the stronger jobless claims data. Benchmark 10-year Treasury notes, down 2/32 in price before the report was issued, fell 5/32 afterward to yield 2.6444 per cent.
Gold edged lower after the dollar firmed. Spot gold, steady above $1,330 before the jobless report, fell 0.7 percent to $1,323.89 an ounce.
Oil prices rose despite easing political worries about Iran and an improving supply picture as traders sought bargains after sharp losses earlier this month.
Brent oil gained 89 cents to settle at $109.21 a barrel, while US crude futures settled 37 cents higher at $103.03 a barrel.