Jobless data fuels rally as fear fades

There’s a sizeable rebound on Wall Street today, as a drop in jobless claims allays fears about the labour market recovery.

Today’s rally may be a hint that market participants are starting to weigh up whether the market has been oversold in response to the woes of emerging-market currencies. There have been a few wobbles in macro data, notably with Monday’s ISM manufacturing index,  but on balance US fundamentals look quite buoyant, even more so after taking stock of today’s improving jobless claims and healthy productivity data.

Jobless claims slid to 331,000 last week, improving by 20,000 from the week before, and comfortably better than forecast by analysts polled by Reuters beforehand, who had given a consensus estimate of 335,000. The definitive snapshot of the labour market will be available with tomorrow’s monthly government report, but today’s data will have brightened perceptions of how the jobs market is faring.

Fourth-quarter US productivity increased at an annualised pace of 3.2%, surpassing analyst predictions of 2.5%, and the previous quarter’s rate was amended higher to 3.6% from a previously announced level of 3.0%.

The upbeat economic reports helped the Dow Jones rise 0.85% or 131 points to 15,571 and the S&P 500 to advance 0.93% to 1768.0.

EUR/USD remains up on the day several hours after the ECB held off from introducing any additional stimulus measures. The euro had strengthened against most major currencies, gaining 0.43% against the dollar and 0.87% against the yen.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.