Stocks Pull Back As US Economy Shows Signs Of Stalling


European stocks gave up most of their gains on Thursday and US equities traded lower after US initial jobless claims pointed to renewed lockdowns taking a heavy toll on a stuttering economy.

New claims came in at 1.42 million, the Labor department said, compared to a market consensus of 1.3 million.

“The recovery appears to be stalling as jobless claims rose for the first time since March and as continuing claims remain elevated,” said Edward Moya at OANDA, calling the US numbers “downbeat”.

But on the upside, Moya said, a less than solid US economy made further government stimulus more likely just as another relief package was being negotiated between the White House and the Senate.

Republicans have been struggling to come up with a bill to counter a $3.5 trillion Democrat proposal, fanning concerns they will not come up with anything ahead of an August break.

However, reports said the Republican Senate majority leader Mitch McConnell would soon unveil a $1 trillion plan after overcoming some differences with the White House.

“Even as the Republicans and Democrats remain far apart on how much to spend in this next round of stimulus, the markets are optimistic than an agreement will be reached sooner rather than that later,” said City Index analyst Fiona Cincotta.

“The prospect of both monetary and fiscal support taps running at the same time is keeping the mood in the market upbeat.”

Such hopes gave Asian and then European market a lift earlier Thursday, outweighing coronavirus concerns and simmering China tensions.

Optimism over the development of a COVID-19 vaccine also sparked some buying.

Meanwhile, Washington and Beijing added to the long list of issues they have butted heads over when the US ordered the closure of the Chinese consulate in Houston within 72 hours.

That came a day after two Chinese nationals were indicted for allegedly hacking hundreds of companies worldwide seeking to steal vaccine research.

China slammed the US move, and threatened retaliation, while Trump said “it’s always possible” more consulates could be closed.

“The escalation in US-China tensions is a reminder of the headline risk faced by investors during the upcoming US election campaign,” said AxiCorp’s Stephen Innes.

London – FTSE 100: UP 0.4 percent at 6,232.66 points

Frankfurt – DAX 30: UP 0.2 percent at 13,123.26

Paris – CAC 40: UP 0.1 percent at 5,040.69

EURO STOXX 50: UP 0.1 percent at 3,375.08

New York – Dow: DOWN 0.2 percent at 26,94.19

Hong Kong – Hang Seng: UP 0.8 percent at 25,263.00 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,325.11 (close)

Tokyo – Nikkei 225: Closed for a holiday

West Texas Intermediate: DOWN 1.0 percent at $41.47 per barrel

Brent North Sea crude: DOWN 1.0 percent at $43.87

Euro/dollar: DOWN at $1.1550 from $1.1570 at 2100 GMT

Dollar/yen: UP at 107.21 yen from 107.15

Pound/dollar: DOWN at $1.2676 from $1.2734


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