By Herbert Lash and Marc Jones
NEW YORK/LONDON (Reuters) – Record-setting world stocks moved higher on Thursday after jobless claims data suggested the U.S. labor market was charging ahead even as new COVID-19 infections surge, while the risk of a sub-par U.S. payrolls report kept the dollar on the defensive.
Economic data from Asia and Europe was largely disappointing but the Labor Department report showed the number of Americans filing new claims for jobless benefits fell last week, while layoffs dropped to their lowest in more than 24 years in August.
The decline in layoffs should help ease concerns about the economy even if the closely watched employment report for August on Friday shows a slowdown in nonfarm payrolls growth.
MSCI’s all-country world index climbed to a new peak, while the S&P 500 and Nasdaq also set new highs. But value, up about 0.58%, outpaced a 0.21% gain in growth, a telling sign as the big tech powerhouses led the benchmark index higher but not the overall market.
“We don’t really have anything that you can hang your hat on and say this is where we’re going, this is the sector that I need to be involved in,” said JJ Kinahan, chief market strategist at TD Ameritrade.
“You’re going to continue to see this back and forth type of trade,” he said.
MSCI’s world stock index, which measures equity performance in 50 countries, rose 0.29% and was on track to post its fifth consecutive closing high. The broad pan-European FTSEurofirst 300 index rose 0.23%, supported by travel, oil, car and chemicals companies [.EU]
On Wall Street, the Dow Jones Industrial Average rose 0.38%, the S&P 500 added 0.32% and the Nasdaq Composite advanced 0.21%.
Overnight in Asia, uncertainty over still-low vaccination rates in many economies and China’s zero-tolerance COVID-19 strategy kept Chinese blue-chips flat, though speculation about more fiscal stimulus offered some support. [G]
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.16%. Japan’s Nikkei added 0.3%, South Korea fell 1%, whereas Hong Kong’s battered tech index enjoyed a fourth day of unbroken gains.
The euro remained near a one-month high versus the greenback in the wake of hawkish comments from German central bank chief Jens Weidmann, who cautioned against inflation risks and called for a slowdown in the European Central Bank’s bond buying.
The euro was up 0.23% at $1.1864.
The hawkish comments were in contrast to the Bank of Japan, which has shown no sign of tapering its massive purchases as the economy remains mired in a decades-long battle with deflation.
That helped the yen edge up 0.03% to $110.0200, while the dollar index, which tracks the greenback versus a basket of six currencies, fell 0.207% to 92.302.
U.S. Treasury yields drifted lower as the market remained on hold ahead of the government’s closely watched employment data on Friday, which could break yields out of a tight range.
The benchmark 10-year yield fell 0.5 basis points to yield 1.297%.
Commodities would likely benefit from any delay in Fed tapering, helping underpin gold at $1,812 an ounce but short of resistance around $1,823.
Aluminium prices rose to a 10-year high on growing concerns that restrictions on Chinese production of the metal are causing supply shortages.
Oil rose more than $1, supported by optimism about the pace of the economic recovery from the pandemic, a sharp decline in U.S. crude stocks and a weaker dollar.
Brent crude was last up $1.71, or 2.39%, at $73.3 a barrel. U.S. crude rose $1.78, or 2.6%, to $70.37 per barrel.
Global covid cases https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrrmkqvm/Pasted%20image%201630571383629.png
(Additional reporting by Sujata Rao in London; Editing by Catherine Evans and Nick Tattersall)
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