Global stocks climb as recession fears ease

LONDON/NEW YORK:

A global equities gauge was up more than 1% on Thursday after lower-than-expected US unemployment claims calmed recession fears and Treasury yields rose alongside the dollar.

Oil prices were eyeing a third straight day of gains, with growing supply risks in the Middle East offsetting demand concerns that had pushed prices to their lowest levels since early 2024 at the start of the week.

On the data side, the US Labour Department said initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended August 3, the largest drop in about 11 months. Economists had expected 240,000 claims.

"It reinforces the fact that labour market momentum is not slowing to the same extent that was represented by the payroll report, and it also reinforces the absence of very significant layoffs in the economy as well," said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York. "For markets it's fairly encouraging."

The data on Thursday was being closely monitored after a weaker-than-expected July jobs report last Friday helped spark Monday's market rout in financial markets around the world.

Investors were forced to unwind carry trades, where they borrow cheaply in Japan to buy dollars and other currencies to invest in higher yielding assets. The unwind helped trigger a 12% plunge in Japanese stocks on Monday and the S&P 500 index followed with a 3% drop.

On Thursday, Wall Street started out in a bullish mood. At 10:39am the Dow Jones Industrial Average was up 519.74 points, or 1.34%, to 39,283.19, the S&P 500 gained 95.31 points, or 1.83%, to 5,294.81 and the Nasdaq Composite climbed 350.88 points, or 2.17%, to 16,546.69.

MSCI's gauge of stocks across the globe rose 8.40 points, or 1.09%, to 779.10. Europe's STOXX 600 index edged up 0.05%.

Analysts said they expected continued market swings in coming days and weeks.

"When you have a volatility shock like this, and you have a degree of unwind in certain positions, you're very prone to sudden reversals and also a degree of uneasiness as the adjustment continues," said Erik Nelson, macro strategist at Wells Fargo.

"I would be surprised if we just went back to everything being fine."

STRONGER DOLLAR

In the currency market, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.24% to 103.36.

Against the Japanese yen, the dollar strengthened 0.49% to 147.41. The euro was down 0.19% at $1.09.

Yields on US Treasuries rose after the unemployment claims data brought some confidence that the US economy is less likely to face an imminent recession.

The yield on benchmark US 10-year notes climbed 3.8 basis points to 4.005%, from 3.967% late on Wednesday. The 30-year bond yield rose 3.1 basis points to 4.2919%.

The 2-year note yield, which typically moves in step with interest rate expectations, rose 6.8 basis points to 4.069%, from 4.001% late on Wednesday.

In energy markets, US crude gained 0.84% to $75.86 a barrel and Brent rose to $78.71 per barrel, up 0.49% on the day.

In precious metals, spot gold added 1.59% to $2,419.29 an ounce. US gold futures gained 0.81% to $2,409.80 an ounce.