This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
The US stock market rally has resumed after a brief pause in the upward march yesterday, with the Dow rising 0.57% or 88 points by early afternoon in New York to 15,501 and the S&P 500 moving up 0.28% to stand above 1750 once again.
The advances follow the release of economic data that couldn’t really be described as encouraging.
Although jobless claims dropped last week by 12,000 to 350,000, the decline was less than the consensus estimate of a Reuters poll, which had called for the number of first-time claimants to fall to 340,000.
The lingering effects of a backlog of claims from California may be clouding the data, as well as fallout from the government shutdown. The four-week average increased to 348,250.
The US trade deficit widened marginally from $38.6 billion to $38.8 billion in August, with overseas demand on the soft side, which caused exports to slip slightly, while imports remain unchanged.
The preliminary reading of the PMI manufacturing index from Markit showed a decline in October, dropping to a level of 51.1 from 52.8 in September. Some regional manufacturing surveys have shown little ill effects from the government shutdown, but this latest report suggests it has caused some drag.
If US growth has been hindered by the shutdown, as seems likely, it is likely to extend the timeframe that the Fed is looking at for starting to reign in its monetary stimulus., which is causing some headwind for the US dollar. EUR/USD rose 0.2% by early afternoon in New York, after earlier having touched its highest level since November 2011.