Global stocks rose as the U.S. dollar fell on Wednesday, driven by soft labor market data and expectations of Fed rate cuts.
According to recent U.S. Labor Department data, initial unemployment claims increased to 238,000 last week, slightly surpassing forecasts, suggesting a weakening labor market.
MSCI’s global stock index increased by 0.60% to 811.63, with Europe’s STOXX 600 rising 0.81%.
“We have slowing but closer to trend growth, with the possibility of the Fed starting to cut rates by September, and earnings that have remained relatively strong, that’s a pretty good backdrop,” said Jack Janasiewicz, head portfolio strategist at Natixis Investment Managers in Boston.
The S&P 500 and Nasdaq rose on Wall Street, driven by tech, utilities, and materials, while healthcare stocks dragged down the Dow.
The Dow Jones dropped by 0.19% to 39,259.90, while the S&P 500 rose 0.24% to 5,521.98, and the Nasdaq Composite increased by 0.50% to 18,119.62.
The dollar index, tracking against major currencies like the yen and euro, dropped 0.43% to 105.21, as the euro gained 0.5% to $1.0798.
“From a seasonality perspective, the first two weeks of July tend to be good and we’re kind of following those seasonal patterns in that the economic numbers continue to point to a slowing economy, not a slow economy, and everything else is still pretty supportive in here,” says Janasiewicz.
Benchmark 10-year Treasury yields declined due to lower jobless claims and weak manufacturing data, with the ISM Non-Manufacturing index below forecasts. The yield on U.S. 10-year notes dropped 8.5 basis points to 4.351%.
The dollar index, tracking the dollar against major currencies like the yen and euro, dropped 0.45% to 105.19. The euro rose 0.53% to $1.0801.
Ahead of the July 4 holiday, the yen hit a 38-year low against the dollar at 161.96, marking its lowest since December 1986.
Oil prices stabilized post initial rise due to larger than anticipated U.S. crude stock draw, but faced limits from economic challenges in China and the euro zone.
Brent crude futures rose slightly to $86.40, and U.S. West Texas Intermediate (WTI) futures increased to $82.94.
Gold prices surged over 1%, reaching a nearly two-week peak due to a weakening U.S. dollar. Spot gold rose 1.42% to $2,362.46 per ounce, and U.S. gold futures increased 1.66% to $2,361.60 per ounce.
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