Stocks brush aside record US unemployment surge

Stocks brush aside record US unemployment surge

Wall Street
The Wall Street street sign in New York City. Angela Weiss/AFP

NEW YORK: Stocks shot higher on Thursday (Mar 26) as investors brushed aside a record surge in US unemployment benefit claims, instead focusing on progress toward a massive stimulus plan and a pledge by world leaders for a "united front" in the fight against the coronavirus pandemic.

Federal Reserve Chairman Jerome Powell said the US central bank would continue to "aggressively" pump liquidity into the economy and added that "we're not going to run out of ammunition" to support lending.

The dollar fell against its main rivals on the developments.

But the Dow surged for a third straight session, rocketing up more than 1,350 points, or 6.4 per cent, to 22,552.17.

Powell acknowledged there would be a sharp downturn as more and more countries confine people at home and close non-essential businesses to slow the spread of the respiratory ailment COVID-19.

In one of the latest indications of that impact, the US Labour Department said first-time unemployment claims soared to 3.3 million last week - the highest number ever recorded.

That compares to 281,000 first-time filers in the prior week and blows away the previous record of 695,000 set in October 1982.

Investors had been expecting a staggering figure so "the shock value was mitigated a bit," said Briefing.com analyst Patrick O'Hare, who added that the size of the rally was likely boosted by end-of-the-quarter rebalancing to equities from bonds.

There was also movement on a massive US$2 trillion stimulus bill, with the House of Representatives expected to vote on Friday on the measure approved on Wednesday by the Senate.

Meanwhile, G20 nations pledged a "united front" in the fight against coronavirus, saying they were injecting US$5 trillion into the global economy to counter the pandemic amid forecasts of a deep recession.

"The united front from the world leaders helped market confidence, because as far as the West is concerned, the battle is in its infancy," said David Madden, a market analyst at CMC Markets UK.

The G20 pledge helped pull European stocks into positive territory. They had spent most of the day in the red after the international ratings agency S&P Global warned that the coronavirus will push Britain and the euro area into recession this year, with their economies expected to shrink by as much as two percent.

SINGAPORE CONTRACTS

In Asia on Thursday, Tokyo's main stocks index ended down 4.5 per cent after surging by almost one fifth over the previous three days, while Hong Kong shed 0.7 per cent and Shanghai eased 0.6 per cent.

Singapore lost more than 1 per cent as its economy contracted sharply owing to the coronavirus fallout.

Compared with the previous quarter, GDP dived 10.6 per cent, as all sectors of the economy were battered.

The nation's economy is viewed as a barometer for the health of global trade.

"Singapore has kicked off the rounds of shockingly poor data," said Fiona Cincotta, an analyst at City Index trading group.

"This is merely giving us a taste of what's to come. The job market across the globe is about to turn very ugly," she added.

Key figures around 2150 GMT:

New York - Dow: UP 6.4 per cent at 22,552.17 (close)
New York - S&P 500: UP 6.2 per cent at 2,630.07 (close)
New York - Nasdaq: UP 5.6 per cent at 7,797.54 (close)

London - FTSE 100: UP 2.2 per cent at 5,815.73 (close)
Frankfurt - DAX 30: UP 1.3 per cent at 10,000.96 (close)
Paris - CAC 40: UP 2.5 per cent at 4,543.58 (close)
Milan - FTSE MIB: UP 0.7 per cent at 17,369.38 (close)
Madrid - IBEX 35: UP 1.3 per cent at 7,033.20 (close)
EURO STOXX 50: UP 1.7 per cent at 2,847.78 (close)

Tokyo - Nikkei 225: DOWN 4.5 per cent at 18,664.60 (close)
Hong Kong - Hang Seng: DOWN 0.7 per cent at 23,352.34 (close)
Shanghai - Composite: DOWN 0.6 per cent at 2,764.91 (close)

Euro/dollar: DOWN at US$1.1031 from US$1.0882 at 2100 GMT
Dollar/yen: DOWN at 109.44 yen from 111.21 yen
Pound/dollar: UP at US$1.2204 from US$1.1878
Euro/pound: DOWN at 90.39 pence from 91.61 pence

Brent North Sea crude: DOWN 3.8 per cent at US$26.34 per barrel
West Texas Intermediate: DOWN 7.7 per cent at US$22.60 per barrel

Source: AFP/de

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