Global stocks climb higher as market jitters ease
U.S. stocks experienced their best trading day since November 2022, driven by an unexpected drop in unemployment claims that helped alleviate concerns about a slowing economy.
The S&P 500 index closed 2.3% higher, the Dow Jones Industrial Average gained 1.8%, and the Nasdaq surged by 2.9%.
Asian stocks also saw gains, recovering some losses from earlier in the week. In Hong Kong, the Hang Seng Index increased by about 1.7%, while South Korea’s Kospi rose over 1%. In Japan, the Nikkei 225 and the Topix remained mostly flat.
This follows Japan’s worst stock market day since 1987 earlier in the week, which triggered a significant global market sell-off.
“The latest jobless claims data, typically not a major market mover, suggests that recent pessimism may have been overstated,” noted a report from UBS Global Wealth Management’s chief investment office.
According to the U.S. Labor Department, initial claims for unemployment benefits dropped more than expected to 233,000 last week.
Despite the apparent global market recovery, analysts caution that trading is likely to remain volatile for the time being.
“The current market volatility is creating short-term trading opportunities for investors,” said Peter McGuire of trading platform XM.com.
“It will be a bumpy ride over the election season and we all await the [US Federal Reserve] policy decision in September.”
The Federal Reserve held off cutting interest rates last week – something that typically boosts growth – in contrast to other central banks such as the Bank of England.
But, this week’s market upheaval stoked further speculation about when – and by how much – the Fed will cut borrowing costs.
“[The] Fed is now likely to cut rates up to 50bps in September which in turn supports expanding valuation for the market,” said Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners.
