Shares are set for a rebound after a European rate cut and a surprise drop in jobless claims helped US stocks reverse Wednesday's losses overnight.
The June SPI 200 futures contract rallied 28 points or 0.6% to 5149 as oil had its biggest rise in six months and metals bounced.
The S&P 500 advanced 15 points or 0.97% to close just below a record high with industrials, energy and tech stocks leading the way. The Dow put on 131 points or 0.89% and the Nasdaq added 1.27%.
The European Central Bank cut its main refinancing rate overnight to 0.5% from 0.75% and declared its "monetary policy will remain accommodative for as long as needed". European markets gyrated wildly following the news before closing with modest gains. Germany's DAX added 0.61%, France's CAC 0.06% and Britain's FTSE 0.15%.
First-time claims for jobless benefits in the US unexpectedly fell to their lowest level in five years, raising hopes that tonight's monthly government jobs report will be stronger than expected. Claims declined by 18,000 to 324,000 last week, well below expectations. Tonight's non-farm payrolls report for last month is expected to show the unemployment rate was steady at 7.6% and the economy created 135,000 jobs, but market commentators said the fall in benefits claims signalled the possibility of a better result.
"The jobless-claims numbers were encouraging, especially in that we're very hopeful that maybe we can beat the consensus" in tonight's jobs report, a senior equity strategist for US Bank Wealth Management told MarketWatch. "The markets would respond constructively to a number in the 175,000 to 200,000 or better range."
Small caps rebounded strongly from heavy falls during Wednesday's trade. The Russell 2000 index rallied 1.69%. Biotechs also gained more than 1.6% and the Dow Jones Transportation Average put on 0.98%. BHP dipped 0.21% in US trade but Rio Tinto added 0.49%.
Oil secured its biggest jump in six months following two days of declines. West Texas Intermediate crude for June delivery was lately up $3.06 or 3.4% to US$94.09 a barrel.
Gold, a traditional store of wealth as currencies are devalued, clawed back most of Wednesday's decline following the ECB rate cut. Gold for June delivery was recently up $20.30 or 1.4% at US$1,466.50 an ounce.
Industrial metals also recouped some of this week's sharp losses as Chinese traders returned to the market from a three-day public holiday. US copper for May delivery was recently up three cents or 0.9% at US$3.11 a pound. In London, copper put on 0.8%. Aluminium, lead, nickel, tin and zinc also improved.
TRADING THEMES TODAY
BOUNCE: A welcome break last night in the recent run of US economic disappointments raises the possibility that the economy may not be slowing as fast as first appeared. Benefit claims are fairly volatile, but it's hard to argue with a five-year low. With this week's central bank decisions out of the way, Wall Street's near-term outlook now depends largely on tonight's non-farm payrolls report. Commodity markets brightened overnight - apologies but I couldn't find closing prices/% rises for the LME. Assuming Shanghai is in a better mood today, the XJO should seal a second straight winning week with a solid rise.
ECONOMIC NEWS: The monthly AIG Services Index is due at 9.30am EST, followed by the quarterly producer price index at 11.30am. China releases its services index at 11am. Tonight's main event in the US is the monthly non-farm payrolls report and unemployment rate. Also due: ISM services PMI, factory orders and average hourly earnings.
