US stocks had their best trading day since November 2022, after a dramatic drop in jobless claims helped ease concerns about a slowing economy.
The benchmark S&P 500 index ended the day 2.3% higher. The Dow Jones Industrial Average rose 1.8%, while the Nasdaq jumped 2.9%.
Asian stocks also rose sharply, paring some of the losses from earlier in the week. In Hong Kong, the Hang Seng Index jumped about 1.7%, while South Korea’s Kospi rose more than 1%. In Japan, Nikkei 225 and Topix stocks were mostly flat.
It comes after Japanese stocks had their worst day since 1987 earlier in the week, creating a the world’s main market route.
“Recent data on jobless claims, while generally not a significant market event, supports the view that recent optimism may have been overstated,” said a report by UBS Global Wealth Management’s chief investment office.
Official figures from the US Department of Labor showed for the first time that claims for unemployment benefits in the US fell more than expected to 233,000 last week.
In spite of apparent recovery In global markets, analysts warn that trade is likely to remain volatile for now.
“Market volatility creates trading opportunities for investors in the short term,” said Peter McGuire from trading platform XM.com.
“It will be difficult during the election season and we all expect it [US Federal Reserve] policy decision in September.”
The Federal Reserve held off on lowering interest rates last week – something that usually boosts growth – unlike other central banks such as the Bank of England.
But, market volatility this week has fueled more speculation about when — and how much — the Fed will cut borrowing costs.
“[The] The Fed is now likely to cut rates by as much as 50bps in September which also supports increased market sentiment,” said Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners.
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