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Stocks in holding pattern despite recovery poised for takeoff

Published on May 06, 2021

European and US equities were mixed on Thursday despite encouraging data providing more indication of the strength of the US economic recovery.

Wall Street opened mixed despite data showing that new US jobless claims plunged by 92,000 last week to under 500,000 for the first time since the start of the pandemic.

That followed a report on Wednesday showing that US private firms added 742,000 jobs in April, with much of them in the crucial services sector, which was hardest hit by virus lockdowns and other restrictions last year.

Official US government data on non-farm payrolls is due out Friday.

“Stocks have really entered a holding pattern here,” said analyst JJ Kinahan at TD Ameritrade.

“Yesterday and today appear to be mostly about range-bound trading ahead of tomorrow’s April payrolls report,” he added.

Briefing.com analyst Patrick O’Hare said the drop in jobless claims is “consistent with an economy that is reopening and necessitating more hiring activity”.

He also pointed to data showing labour productivity rising at a 5.4 percent annual rate and unit labour costs decreasing at a negative 0.3 percent rate.

He said these figures “will continue to feed the Fed’s patience for holding its easy policy line despite clear signs of commodity cost inflation.”

Worries that a surge in inflation as economies reopen will push the US Federal Reserve to raise rates have kept investors on edge and put on a brake on the months-long rally that has seen US stocks strike new highs.

Meanwhile, the Bank of England said that the UK economy will enjoy a stronger-than-expected recovery this year after the government began easing its coronavirus pandemic lockdowns quicker than anticipated.

It now forecasts that Britain’s economy will rebound by 7.25 percent this year, compared to a 5.0 percent gain it forecast in February.

London stocks drifted higher in afternoon trade. The pound drifted lower against the dollar and dropped against the euro.

“Following Wednesday’s super-surge, the European markets entered Thursday’s trading at a light jog,” said Spreadex analyst Connor Campbell.

Global equities had rebounded Wednesday as investors focused on bright earnings and data pointing to an economic recovery.

– Key figures around 1330 GMT –

London – FTSE 100: UP 0.2 percent at 7,049.64 points

Frankfurt – DAX 30: DOWN 0.1 percent at 15,154.06

Paris – CAC 40: FLAT at 6,338.56

EURO STOXX 50: DOWN 0.3 percent at 3,992.24

New York – Dow: UP 0.2 percent at 34,301.18

Tokyo – Nikkei 225: UP 1.8 percent at 29,391.19 (close)

Hong Kong – Hang Seng Index: UP 0.8 percent at 28,637.46 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,441.28 (close)

Euro/dollar: UP at $1.2053 from $1.2005 at 2100 GMT

Pound/dollar: DOWN at $1.3901 from $1.3905

Euro/pound: UP at 86.72 pence from 86.33 pence

Dollar/yen: UP at 109.32 yen from 109.21 yen

Brent North Sea crude: DOWN 0.1 percent at $68.88 per barrel

West Texas Intermediate: DOWN 0.2 percent at $65.53 per barrel