Stocks and exchange-traded funds (ETFs) jumped early Thursday after China showed confidence in Europe and said it had no plans to sell the debt it holds for the continent.
Stocks surged in early Thursday trading after China reassured investors it would not be selling off any European debt. Despite a recent report that China was considering cutting some of its exposure to European debt, Thursday’s gains came after the agency that manages China’s $2.5 trillion in foreign reserves denied the report. While concerns over the continuing debt problems in Europe have dominated global financial news, dragging down stocks in recent weeks, China’s reassurance helped push the euro to $1.22 Thursday. [Global ETFs in Harvard’s Portfolio: Do They Make the Grade?]
- iShares MSCI EMU (NYSEArca: EZU)
- CurrencyShares Euro Trust (NYSEArca: FXE)
News of China’s confidence overshadowed disappointing U. S. Department of Labor reports Thursday, which showed initial claims for unemployment benefits falling last week, though not reaching the levels forecast by economists. Initial jobless claims for the week of May 22 fell a less-than-expected 14,000 to settle at 460,000. Overall, continuing claims are headed in the right direction, at least for the past two weeks. In the May 15 week, claims fell 49,000 to 4.607 million and bring down the four-week average by 12,000 to 4.637 million.
Thursday’s revised report on GDP showed the U. S. economy did not grow as fast in the first quarter as previously thought, either. The good news is there wasn’t much overall change in gross domestic product (GDP) numbers for the first quarter, and resulted from many small revisions to the numbers across the board, as opposed to a large change in one component. 1Q GDP was revised down to an annualized 3% pace, instead of the initial estimate of 3.2%, and even further from the 3.5% analysts originally forecast. [Retail Sales: Numbers Getting Better.]
- SPDR S&P Retail (NYSEArca: XRT)
Oil rose above $73 a barrel in Europe on prospects for strong economic growth in Asia and market anticipation of positive data regarding U. S. growth prospects. The rise followed a report released by the Organization for Economic Cooperation and Development showed raised expectations for growth in eurozone countries. [ETF Plays for Both Inflation and Deflation]
- United States Oil (NYSEArca: USO)
Read the disclosure; Tom Lydon is a board member of Rydex|SGI.
Aaron Hurst contributed to this article.
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