Asian equities are set for a choppy trading session on Friday after technology stocks lifted the S&P 500 to a new record even as investors weighed an unexpected rise in the number of Americans filing new claims for unemployment benefits.
A U.S. jobless claims report showed a second straight weekly increase earlier on Thursday, bucking the streak of strong economic data from payrolls and job vacancies that had buoyed investor confidence in a quick economic rebound.
The softer data helped yields on the benchmark 10-year U.S. Treasury note drop to its lowest level since March 26, and spur demand for high growth stocks in the technology sector, which was the biggest gainer in the S&P 500. The tech-heavy Nasdaq also closed at a seven-week high on Thursday.
“Jobless claims set a tone for the market that perhaps things are not as strong as people think and we’re still ways away from a recovery,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
Australian S&P/ASX 200 futures rose 0.03% in early trading, while Hong Kong’s Hang Seng index futures lost 0.17%. Japan’s Nikkei 225 futures was up 0.45%.
U.S. Federal Reserve Chairman Jerome Powell signaled on Thursday the central bank is nowhere near reducing its support for the U.S. economy, saying at an International Monetary Fund event that while the economic reopening could result in a momentary surge in prices, he expects it to be temporary and it will not constitute inflation.
Powell’s comments reaffirmed the accommodative stance outlined in the minutes of the Fed’s policy meeting published on Wednesday.
Aided by the further pullback in yields, traders piled into megacap tech stocks such as Apple Inc, Microsoft Corp and Amazon.com Inc, which were the main drivers of the S&P 500.
“The movement in the market was predicated on rates,” said Thomas Hayes, chairman of Great Hill Capital. “As long as rates stay compressed there’s a bid for long duration earnings power, which was embodied in the rally in tech.”
On Wall Street, the Dow Jones Industrial Average rose 0.17% to 33,503.57, the S&P 500 gained 0.42% to 4,097.17 and the Nasdaq Composite added 1.03% to 13,829.31.
U.S. Treasury yields fell on Thursday, pressured by Powell’s dovish comments and weaker-than-expected initial weekly jobless claims.
Benchmark 10-year notes last rose 9/32 in price to yield 1.6244%, from 1.654% late on Wednesday.
The U.S. dollar dropped to a two-week low against a basket of currencies, tracking Treasury yields following the surprise rise in U.S. unemployment applications.
The dollar index fell 0.379%, with the euro up 0.03% to $ 1.1916
The Japanese yen weakened 0.05% versus the greenback at 109.31 per dollar, while the South Korean won was flat versus the greenback at 1,116.18 per dollar.
Gold prices jumped, scaling a one-month peak as the Fed’s assurances that it will maintain its accommodative policy weighed on Treasury yields and the greenback.
Spot gold added 1.1% to $ 1,756.36 an ounce. U.S. gold futures settled up about 1% at $ 1,758.2.
Crude oil prices were little changed as Wall Street’s rally and the soft dollar offset concerns over a big jump in U.S. gasoline stocks.
U.S. crude fell 0.28% to settle at $ 59.60 per barrel, while Brent settled at $ 63.20 per barrel, up 0.06% on the day.