Markets steady despite more positive US news
LONDON—Markets were steady on Thursday following recent gains that have pushed many U.S. indexes to their highest levels since the collapse of investment bank Lehman Brothers in 2008.
In recent weeks, stocks have rallied on the combination of upbeat U.S. economic data and a more benign European debt backdrop. Fears of a Greek debt default have eased after the country concluded a bond swap with its private creditors, clearing the way for its euro130 billion bailout agreed.
That has left investors to focus on the U.S. economic newsflow and once again the indicators were relatively strong.
Weekly jobless claims fell further to 351,000, while a manufacturing survey from the New York Fed showed the sector continuing to grow.
"Today's markets reflect consolidation after the sizable recent moves in the U.S. Treasury yields, precious metals and currencies such as the Japanese yen," said Vassili Serebriakov, an analyst at Wells Fargo Bank. "There has however been little change to the overall theme of an improvement in the U.S. economic picture, with today's jobless claims data supporting the notion of further solid U.S. job gains."
In Europe, Germany's DAX was up almost 1 percent at 7,144 with the CAC-40 in France up 0.4 percent to 3,580. The FTSE 100 index of leading British shares was 0.08 percent lower at 5,940.
Investors appeared to shrug off Wednesday night's news that Fitch Ratings was lowering its outlook for the United Kingdom, indicating a ratings downgrade might be on the horizon. The U.S. ratings agency on Thursday followed up its assessment of the U.K. with an announcement that it had revised its outlook on the Bank of England to negative as well.
Wall Street opened slightly up with the Dow Jones industrial average up 0.2 percent at 13,224, while the broader S&P 500 index was up 0.4 percent at 1,399.
In the currency markets, the euro recouped some recent losses, trading 0.5 percent higher at $1.3101. However, the dollar's been buoyant since U.S. Federal Reserve chairman Ben Bernanke indicated that the central bank will not be coming forward with another monetary stimulus soon given the recent signs of an improving U.S. economy.
For much of the time since the financial crisis began around four years ago, the dollar has traded inversely to the performance of the U.S. economic data. When the U.S. economy was in deep recession, it often benefited from its perceived status as a safe-haven asset -- the opposite was true when the U.S. was seemingly on the mend.
"The dollar seems to be now moving in tandem with a growing U.S. economy as opposed to being a risk-off asset," said Jordan Lambert, a trader at Spreadex.
It's not just against the euro that the dollar has been benefiting. Against the yen, it's near the 84 yen mark, way above the mid 70s yen it was trading at for much of last year.
Unsurprisingly Japanese stocks have garnered a lot of support in the wake of the yen's retreat, with investors hoping it will help the country's exporters. Japan's Nikkei 225 index rose a further 0.7 percent to 10,123.28 -- its highest close since late July.
Elsewhere in Asia, Hong Kong's Hang Seng closed 0.2 percent higher to 21,353.53.
But mainland Chinese shares fell, a day after Chinese Premier Wen Jiabao said curbs that have started to cool surging housing prices will remain in place despite complaints they might worsen an economic slowdown. Construction and real estate sales are key drivers of China's growth. The benchmark Shanghai Composite Index lost 0.7 percent to 2,373.77 and the Shenzhen Composite Index shed 0.8 percent to 960.96.
Pamela Sampson in Bangkok contributed to this report.