SCOREBOARD: Jobs cheer

Better-than-expected US jobless claims saw markets put on a more positive mood overnight.

Equity markets have been in a much more buoyant mood across the board today, albeit against the backdrop of very light pre-holiday volumes. On Wall Street, the S&P 500 index closed 10.38 points, or 0.83 per cent stronger (1,254.09), while the Dow Jones gained 64.86 points, or 0.54 per cent (12,172.60), and the technology-weighted Nasdaq climbed 21.48 points, or 0.83 per cent (2,599.45). Weekly jobless claims in the US helped underpin the bullish mood falling by 4,000 to 364,000, defying expectations of an increase of 380,000. The figure, the lowest since April 2008, is good but with seasonal effects and some companies still trimming back on staff it may not necessarily mean that the US is out of the woods just yet.

Meanwhile, the downward revision in third-quarter US GDP growth, to 1.8 per cent from 2 per cent, was shrugged off as something to be consigned to the history books. With the recent raft of decent economic data from the US it would appear that investors are reckoning on the fourth-quarter GDP figures as compensation.

Elsewhere, European markets saw risker assets trade broadly higher, buoyed by US data, with the FTSE-100 closing 1.25 per cent higher (5,456.97) and the CAC-40 putting on 1.36 per cent (3,071.80), while the DAX lifted 1.05 per cent (5,582.18) and Madrid gained 1.01 per cent as its new government entered office. The European Central Bank long-term refinancing operation gained some traction, as banks in the UK managed to pare back ground, with investors taking a more upbeat view on the increased liquidity. Lloyds and RBS were the standout performers.

The Australian dollar gained strength on renewed risk appetite, lifting to 101.3 US cents at 0730 AEDT, up from 100.87 US cents on Thursday. Meanwhile, the best performing currencies were the Canadian dollar and the Kiwi, which rebounded on the firmer commodity prices. Sterling was been fairly flat in spite of an upward revision of third-quarter GDP growth to 0.6 per cent from 0.5 per cent. The euro also found the going tough, paring gains to 130.5 US cents at 0730 AEDT off a high of 131, despite the passing of Italy's austerity budget through the senate overnight.

Gold prices, while momentarily breaking above the 200-day moving average yesterday, failed to make any headway above $1621 as safe haven interest waned. Both Brent and WTI climbed overnight. WTI has been capped by the psychological $100 a barrel as investors hover between confidence on US data, and fears about further European austerity measures. Possible disruptions to global crude supplies have also underpinned prices, as tensions rise with respect to the alleged nuclear ambitions of Iran. Elsewhere in the commodities space, copper prices moved up also but the 55-day moving average resistance suggests that the upside is likely to remain fairly muted.

Looking ahead, it's a quiet day locally, while in the US, data on new home sales, durable goods orders and personal income and spending are due overnight.

Brenda Kelly is a market analyst at CMC Markets. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.

*This is the final SCOREBOARD column for 2011. SCOREBOARD will return on January 4.


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