Risk appetite has held strong this morning, leaving the “safe haven” US dollar under pressure, as equities around the world have jumped with the Hang Seng closing up 7.41 percent while Germany’s DAX index is currently up over 5 percent and the DJIA is now up almost 2.5 percent.
Financial shares were responsible for much of these gains, but this morning’s release of [B]US factory orders[/B] helped provide a boost to basic materials and industrial stocks. Indeed, the Commerce Department said that new orders jumped 1.8 percent in February, marking the first increase in seven months and adding to a handful of indicators that have shown surprise improvements over the past week.
One area where there was no positive news was in the labor market, as both [B]initial and continuing jobless claims[/B] hit the highest levels since recordkeeping began in 1967. According to the Labor Department, initial claims rose by 12,000 during the week ending March 28 to 669,000 while continuing claims surged by 161,000 during the week ending March 21 to 5,728,000. The moves do not bode well for Friday’s employment reports, especially since the unemployment rate is already forecasted to surge to 8.5 percent - the highest since 1983 - from 8.1 percent, and creates potential for these optimistic markets to see a sharp turnaround. All told, though, with the greenback still trading as a “safe haven” asset, increased risk aversion could provide a boost to the currency.
[B]US Initial Jobless Claims (White), Continuing Claims (Green), Unemployment Rate (Blue)[/B]
[I]Source: Bloomberg[/I]