US stocks open higher despite unemployment surge due to Covid-19

London — US stocks shot higher at the opening bell on Thursday, brushing aside a record surge in unemployment benefit claims, as a huge stimulus plan advanced.

Meanwhile, European and leading Asian stock markets were back in the red as investors there once again focused on the devastating economic fallout the coronavirus pandemic is expected to wreak.

In one of the latest indications of that impact, the US labour department said first-time unemployment claims soared to 3.3-million last week — the highest number ever recorded. That compares to 281,000 first-time filers in the prior week and blows away the previous record of 695,000 set in October 1982.

“The key takeaway from the report is that it underscores for everyone how much worse the current economic situation is than anything else experienced in this modern age,” said market analyst Patrick O’Hare at Briefing.com.

“In a counter-intuitive way, then, this jarring initial claims report could be the headline that was needed to ensure the US House [of Representatives] moves just as quickly as it can to pass the fiscal stimulus bill,” he said.

The House of Representatives is expected to vote on an unprecedented $2-trillion stimulus package as early as Friday.

Meanwhile, US Federal Reserve chair Jerome Powell said on Thursday that it would continue to “aggressively” pump liquidity into the economy, while acknowledging there would be a sharp downturn.

The dollar was down sharply against its main rivals.

Powell’s comments came as G20 leaders were to hold a summit by teleconference, with hopes they would provide a united front after the group of leading economies was accused of being too slow to address the crisis.

In Europe, stocks were lower after the international ratings agency S&P Global warned that the coronavirus will push Britain and the euro area into recession this year, with their economies expected to shrink by as much as 2%.

In afternoon trading, London shares were down 1.8%, while Frankfurt slid 1.7% and Paris 1.6%.

Singapore contracts 

In Asia on Thursday, Tokyo’s main stocks index ended down 4.5% after surging by almost one fifth over the previous three days, while Hong Kong shed 0.7% and Shanghai eased 0.6%.

Singapore lost more than 1% as the city-state said its economy contracted sharply owing to virus fallout. Compared with the previous quarter, GDP dived 10.6%, as all sectors of the economy were battered.

“Singapore has kicked off the rounds of shockingly poor data,” said Cincotta. “The GDP contracted at an annualised rate of 10.6%, the fastest rate of contraction in over a decade. This is merely giving us a taste of what’s to come. The job market across the globe is about to turn very ugly.”

Despite the Singapore update, other Asian stock markets rose, notably those playing catch up after being closed Wednesday.

AFP