The US markets saw a significant surge on Thursday, with all three major indexes closing significantly higher after the number of jobless claims fell more than expected in the past week, easing concerns about the labor market weakening too quickly. Stocks had been heavily sold off after last week’s July job report, which raised fears of a potential US recession. Traders also cited a unwind of positions in carry trades, where investors borrow money from economies with low interest rates to fund their bets in high-yielding assets elsewhere. The second-quarter earnings season is winding down, but investors are closely watching the final results after some disappointments earlier in the reporting period. The broad S&P 500 index rose by 2.3 percent, while the tech-heavy Nasdaq and Dow Jones industrial indexes grew by 2.9 percent and 1.8 percent, respectively.
Commodities traded higher across the board yesterday. Oil prices rose on Thursday for the third consecutive session after US job data eased demand concerns. Geopolitical tensions in the Middle East also helped prices recover from an eight-month low on Monday. Prices strengthened after data showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting that fears of the labor market collapsing were overblown. Elsewhere, the killings of senior members of the militant groups Hamas and Hezbollah last week increased the possibility of retaliatory attacks from Iran against Israel, raising concerns about the oil supply from the world’s largest producing region. WTI oil rose by 0.9 dollars to $76.1 per barrel, while Brent oil ended the day with a gain of 0.8 dollars to $79.1 per barrel.
Base metals rose overall yesterday. The day’s loser was nickel, which declined by 0.15 percent. Aluminum and copper rose by 0.5 percent and 0.7 percent, respectively, while lead increased by 1.5 percent. Tin climbed by 2.0 percent, and zinc advanced by 3.1 percent. Gold prices rose by more than 1.0 percent on Thursday, supported by steady demand for safe-haven assets and growing expectations of a significant interest rate cut from the US Federal Reserve in September. Gold is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low-interest environment. Gold prices rose by 42.6 dollars to $2,424.9 per ounce yesterday.
During the green day on the stock market, Nvidia climbed by 6.1 percent, while tech giant Apple advanced by 1.5 percent. E-commerce giants Amazon and Alphabet, the parent company of Google, both rose by 1.9 percent. Even sectors like finance performed strongly yesterday, with banks like JP Morgan and Bank of America increasing by 1.8 percent and 2.4 percent, respectively.
The US ten-year Treasury bond rose by 4 basis points to 3.99 percent.
Asian markets are ending a tough week on a positive note as Japanese stocks are close to recovering all the major losses from Monday, while the yen fell again as markets reduced the likelihood of a sharp US interest rate cut. The mood was also lifted by Chinese data showing that consumer inflation was at 0.5 percent in July, well above expectations of a 0.3 percent increase, indicating that the risk of the economy slipping into deflation has decreased. At 07:30, Shanghai is trading sideways, while the Nikkei 225 has declined by 0.3 percent. Hang Seng has performed positively and risen by 1.4 percent.
On the Stockholm Stock Exchange, it is quiet on the earnings front. Among the morning’s recommendations, Arctic lowers the recommendation for SBB to hold from buy. In addition, Jefferies raises Essity’s target price to 298 kronor (278) and reiterates hold. SEB raises Sampo’s target price to 44 euros and changes the recommendation to buy from neutral, while Pareto Securities lowers Surgical Science’s target price to 210 kronor (220) and reiterates the previous buy recommendation.
On the macro level, Friday is relatively calm. The day begins with Sweden’s monthly industrial production for June being presented at 08:00. At the same time, Germany’s monthly consumer price index for June will be released.
Analysis:
The US markets experienced a significant surge, driven by better-than-expected jobless claims data and easing concerns about a weakening labor market. Commodities also saw gains, with oil prices rising on geopolitical tensions and strong demand for safe-haven assets like gold. Technology and finance sectors performed well, contributing to the overall positive sentiment in the markets. Asian markets showed signs of recovery, supported by positive economic data. Investors should monitor geopolitical developments and central bank actions for potential market impacts.