US stocks rise as main economies emerge from lockdown

Tech stocks helped lead a Wall Street rally that sent the Nasdaq Composite into positive territory for the year.

The tech-heavy Nasdaq was up 1.2 per cent in mid-morning in New York, having climbed as much as 1.5 per cent earlier to briefly wipe out its 2020 losses. The S&P 500 jumped 1.3 per cent, with its communication services sector up more than 4 per cent.

Advances on Wall Street come as investors track the lifting of lockdowns that have paralysed economic activity across the globe.

“The strongest economies are starting to emerge from lockdown and that’s a big positive,” said Fabiana Fedeli, global head of fundamental equities at Robeco, adding that investors have started scouring the market for “laggards which are slightly wounded but not mortally wounded”.

Investors looked past another set of hefty US jobless claims to focus instead on government plans to slowly reopen economies.

US government data on Thursday showed the pace of weekly jobless claims continued to slow. The Labour Department said 3.17m Americans filed for unemployment benefits last week, down from 3.85m a week earlier, bringing the tally for the past seven weeks to more than 33m.

Following the release of the jobs figures, the yield on the 10-year Treasury note fell 0.04 percentage points to 0.677 per cent as investors sought to buy government bonds.

In Europe, the region-wide Stoxx Europe 600 benchmark rose 1 per cent while Frankfurt’s Xetra Dax gained 1.1 per cent.

London’s FTSE 100 climbed 1.2 per cent after the Bank of England announced its decision to hold interest rates steady. The pound reversed earlier gains against the dollar to be down 0.5 per cent by the afternoon.

The Turkish lira also weakened on Thursday, hitting an all-time low after Ankara announced a crackdown on “manipulation” by foreign banks based in London. The currency slipped to a fresh low of TL7.2685 per US dollar in earlier trading, reflecting investor worries over the country’s economic strength.

Oil prices reversed morning losses following reports about further production cuts, with West Texas Intermediate, the US marker, up 7.3 per cent at $25.75 a barrel, while global benchmark Brent crude climbed 3.5 per cent to $30.75 a barrel.

“Given the severity of the current market situation and significant production curtailments announced already since April, shale producers are not relying on natural decline but are rather choosing more drastic methods to reduce their output substantially and fast,” said Veronika Akulinitseva, vice-president of North American shale and upstream at Rystad Energy.

The rise in European bourses came after April trade data showed a surprise uptick in Chinese exports of 3.5 per cent compared with the same month a year ago. Economists had expected a fall of almost 16 per cent.

A private survey of Chinese business activity released earlier in the day underscored weakness in the country’s economy as its services sector contracted for a third consecutive month in April because of the pandemic.

The Caixin-Markit services purchasing managers’ index also showed the second-sharpest fall in export orders and the fastest rate of job shedding on record for China’s services industry.

Some analysts pointed out that the extent of the Chinese economy’s recovery from the pandemic was still unclear.

Zhong Zhengsheng, chief economist at CEBM Group, said the “second shockwave for China’s economy brought about by shrinking overseas demand should not be underestimated in the second quarter”.

China’s CSI 300 index of Shanghai and Shenzhen-listed stocks closed down 0.3 per cent.

Meanwhile, Hong Kong’s Hang Seng slipped 0.7 per cent, while Japan’s Topix benchmark fell 0.3 per cent and Australia’s S&P/ASX 200 dipped 0.4 per cent.

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