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World equity markets, yields rise on US jobs data

World equity

A report from the Commerce Department confirmed economic growth accelerated at a 6.4% annualized rate last quarter

World equity markets and US Treasury yields rose as better-than-expected jobless claims data and a positive report on first-quarter gross domestic product (GDP) showed that economic recovery is gathering steam

The number of Americans filing new claims for unemployment benefits dropped to 406,000 for the week ended May 22, according to the US Labor Department, as layoffs subsided, with companies desperate for workers to meet surging demand unleashed by a rapidly reopening economy.

That was the lowest since mid-March 2020 and kept claims below 500,000 for three straight weeks. Economists polled by Reuters had forecast 425,000 applications for the latest week.

A separate report from the Commerce Department on Thursday confirmed economic growth accelerated at a 6.4% annualized rate last quarter, thanks to the massive fiscal stimulus.

The data, which was unrevised from the estimate reported last month, was the second fastest GDP growth since the third quarter of 2003.

Benchmark 10-year Treasury yield advanced to 1.6028% from 1.574% late on Wednesday.

This is the first time that continuing jobless claims beat expectations and it shows that more people are starting to go back to work and this is very positive for the economy, said Thomas Hayes, managing member at Great Hill Capital.

The MSCI world equity index added 0.05% to 708.87. Europe’s broadest stock index added 0.27%, driven by industrials, financial, and basic materials sectors.

On Wall Street, the benchmark S&P 500 and Dow finished higher with financial, industrials, and consumer discretionary stocks making the most gains. The Nasdaq index closed lower, weighed down by weakness in tech shares including Apple and Microsoft.

The Dow Jones Industrial Average added 0.41% to 34,464.64, the S&P 500 advanced 0.12% to 4,200.88, and the Nasdaq Composite shed 0.01% to 13,736.28.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan clawed back losses to trade flat, just below Wednesday’s near-two week high.

Multiple Federal Reserve officials made comments this week to calm inflation worries and signal a possible start to talks to end the central bank’s bond buying program.

Vice Chair Richard Clarida said this week recent inflation pressures would prove to be largely transitory, though he added that policymakers will be at a point to begin discussing tapering in upcoming meetings.

The Fed Vice Chair for supervision, Randal Quarles, suggested that at some stage it will become important for the US central bank to discuss plans to tighten its asset purchase program.

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