Global equity markets edged higher and bond yields eased off earlier lows on Thursday as investors awaited word on a new U.S. aid package to counter the economic fallout from the coronavirus crisis.
Safe-haven gold extended its record-breaking run, driven by expectations of more stimulus, while the dollar gained after data showed fewer Americans sought jobless benefits last week. Gold has been rising on concerns stimulus will fuel inflation and erode the value of the dollar.
Initial claims for state unemployment benefits fell 249,000 to a seasonally adjusted 1.186 million for the week ended Aug. 1, the U.S. Labor Department said, the lowest reading since mid-March.
Revised data for June showing payrolls jumped by 4.314 million jobs instead of adding 2.369 million as previously estimated cheered investors who see a stronger economy than those that fear a resurgence in COVID-19 cases may indicate.
Still, a proper economic recovery is far away, said Jeffrey Christian, managing partner of CPM Group.
“There are mixed signals that the economy is recovering and some of the signs of recovery are relatively superficial as they show aggregate figures and not how medium and small enterprises continue to suffer,” Christian said.
More than 1 million initial claims a week is not desirable if you think the economy is recovering, said Yousef Abbasi, global market strategist at StoneX Group Inc in New York. The report, he said, supports the need for stimulus.
“It puts us right where the Fed wants to be, right where you’d want to be, if you’re thinking Washington needs to get stimulus done,” Abbasi said. “You don’t want them to be too encouraged by better data to slow their approach.”
Republicans and Democrats remained far apart about what to include in another wave of relief after nearly two weeks of talks on next steps to address a crisis that has killed more than 157,000 Americans and thrown tens of millions out of work.
The relief bill should be more targeted than the first to preserve ammunition if another shutdown should require further aid, former Reserve Bank of India Governor Raghuram Rajan told the Reuters Global Markets Forum on Wednesday.
In Toronto, S&P/TSX composite index was unofficially up 77.49 points, or 0.47%, at 16,579.10, extending gains to a third straight session.
The materials sector, which includes precious and base metals miners and fertilizer companies, fell 0.8%.
Spot gold hit an all-time high of $2,069.21 an ounce and was up $19.2631, or 0.94%, to $2,058.66 an ounce. U.S. gold futures settled 1% higher at $2,069.40.
The energy sector climbed 1.4%, as Oil prices hovered near five-month highs as support from a weak greenback and falling U.S. crude inventories countered bearish sentiment on fuel demand.
Brent crude futures settled down 8 cents at $45.09 a barrel. U.S. crude futures fell 24 cents to settle at $41.95 a barrel.
Bausch Health shares rose 4% after it said it would spin off its eye care unit, Bausch + Lomb, into a separate publicly-listed company, seven years after acquiring it for nearly $9-billion.
Shares on Wall Street shrugged off a sluggish start and closed higher on Thursday, with the Nasdaq ending the session above 11,000 for the first time as investors hoped for a new fiscal stimulus package.
Tech and tech-related heavyweight stocks such as Apple and Facebook helped pace gains on the indexes. The tech-heavy Nasdaq clinched a new record high in early trading, and closed above the 11,000-mark for the first time after initially climbing above it on Wednesday.
The benchmark S&P 500 and blue-chip Dow were about 1% and 7% away from their own peaks scaled in February.
“Markets have been incredibly resilient, there is a big fear of missing out and it is the old stalwarts, the technology leaders that keep driving the market higher,” said Sal Bruno, chief investment officer at IndexIQ in New York.
Unofficially, the Dow Jones Industrial Average rose 185.66 points, or 0.68%, to 27,387.18, the S&P 500 gained 21.39 points, or 0.64%, to 3,349.16 and the Nasdaq Composite added 109.67 points, or 1%, to 11,108.07.
Ahead of the deadline for a new stimulus package, the focus now shifts to July jobs report Friday morning, with analysts forecasting a rise of 1.58 million new jobs last month and a decline in the unemployment rate to 10.5%.
As major averages continue to rally off their March lows, powered by heaps of fiscal and monetary stimulus and better-than-feared second-quarter earnings, the Dow and S&P notched their fifth straight daily gain, with the Nasdaq climbing for a seventh consecutive session.
The corporate results season is now in its final stretch, with about 424 S&P 500 firms having reported so far. Earnings have been about 22.5% above analyst expectations, according to IBES Refinitiv data, the highest on record since 1994.
Communication services and technology were the best performing of the 11 major S&P sectors on the day.
Among individual shares, Becton Dickinson and Co dropped after posting quarterly revenue below estimates as delayed elective procedures during coronavirus-led lockdowns squeezed demand for some of its devices.
Western Digital sank after the hard drive maker reported weaker-than-expected fourth-quarter revenue and forecast a soft current quarter.
Bristol-Myers Squibb Co gained after the drugmaker raised its annual profit forecast on hopes of a recovery in demand for its hospital-administered drugs.
ViacomCBS Inc jumped after beating analysts’ estimates for quarterly revenue due to high demand for streaming.
The pan-European STOXX 600 fell 0.73% and London’s FTSE 100 closed down 1.27%, pulled lower after Glencore scrapped its dividend. Europe’s mining index fell 2.3%.
MSCI’s benchmark for global equity markets rose 0.19% to 565.17.
Treasury yields fell, with the 10-year note sliding to 0.504% at one point, its lowest ever after a big down spike on March 9. The benchmark note last yielded 0.5395%.
The euro climbed to its highest against the dollar since May 2018 before giving up its gains. The euro was up 0.08% to $1.1871.
The weak dollar/strong euro trend will continue into next year, a Reuters poll showed, on expectations the U.S. economic recovery is flagging, especially compared with Europe.
The dollar index rose 0.026%, while the Japanese yen was flat versus the greenback at 105.57 per dollar.
The British pound rose to a five-month high against the dollar after the Bank of England left interest rates at 0.1% and warned about possible risks from taking rates below zero.
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