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Wall Street stocks slump as US jobless claims rise

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NEW YORK, NEW YORK - AUGUST 19: A hiring sign is displayed in a store window in Manhattan on August 19, 2021 in New York City. Despite continued concerns about the Delta variant of the Covid virus, the United States economy continues to grow with the  leading economic index jumping 0.9% last month. (Photo by Spencer Platt/Getty Images)
There were 332,000 new initial claims for jobless support. Photo: Spencer Platt/Getty Images

Wall Street tumbled into red on Thursday as the number of Americans filing new claims for unemployment support increased by 20,000.

According to the US Labour Department, there were 332,000 new initial claims for jobless support in the week to 11 September, up from 312,000 in the previous seven days, on a seasonally adjusted basis.

Economists were expecting 320,000 claims, anticipating delayed filings after Hurricane Ida to create a small weekly increase.

However, the four-week moving average was the lowest since March 2020, when the pandemic hit the US economy, at 335,750.

US markets ticked lower on the back of the news, while stock markets in Europe continued their positive session.

The S&P 500 (^GSPC) dipped 0.6% and the tech-heavy Nasdaq (^IXIC) fell almost 0.7% by the time of the European close. The Dow Jones (^DJI) was down 0.5%.

In London, the FTSE 100 (^FTSE) ended 0.2%, aided by a weaker pound, while the French CAC (^FCHI) gained 0.8% and the DAX (^GDAXI) was almost 0.2% higher in Germany.

Travel and hospitality shares are among the risers in London, while mining companies are lagging, following a fall in commodity prices.

“The FTSE 100 started on the front foot on Thursday as investors faced competing catalysts from East and West,” AJ Bell investment director Russ Mould said.

“Some decent corporate news and an upbeat report from the US manufacturing sector outweighed continuing worries about China which dragged down mining stocks and other firms with links to the Chinese economy including luxury brand Burberry."

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It came as US retail sales unexpectedly increased 0.7% last month, well ahead of the expected 0.8% fall.

This followed a downwardly revised 1.8% decline in July, suggesting that demand was more resilient than forecast, despite a hiring slowdown in August.

Excluding motor vehicle and parts and gasoline sales, underlying retail sales were 2% stronger during the month, the Commerce Department said.

Furniture and home furnishing sales were up 3.7% over the period, while food and beverage spending rose 1.8% and general merchandise jumped 3.5%.

Read more: Oil Steadies After Drop in US Inventory, Gas Rally Spurs Gain

Asian shares gave up early gains to fall into the red again overnight, dragged by sharp declines in China and Hong Kong. This was even after a strong lead-in from Wall Street which had also pushed the dollar to the lower end of its recent range.

New data showed that China’s retail sales and factory output growth slowed, given fresh Delta variant outbreaks and supply chain disruptions.

The Hang Seng (^HSI) fell almost 2% on the day, with property names continuing to decline, while the Shanghai Composite (000001.SS) dipped 1.3%. 

In Japan, the Nikkei (^N225) fell 0.6% after the country cut its growth forecasts as a surge of COVID cases dampened consumer confidence. This was after the index in Tokyo hit a 31-year high on Monday.

Kyle Rodda of IG said: “The regional issues very much revolve around continued concerns about growth, China’s crackdown on its private sector, as well the unfolding collapse Chinese property developer Evergrande group, as talks of some sort of restructuring gather steam, after a suspension in the trading of the company’s bonds were announced.

“Overall, markets in Asia, and globally at that, remain still in a very angsty environment, with volatility creeping up as calls grow for a perhaps prolonged patch of weak risk sentiment.”

Watch: JPMorgan PB 'Very Cautious' of China's Property Sector

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