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Stocks drift lower as US jobless claims continue to rise

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3-min read
A US Post Office branch in Seattle. Photo: Elaine Thompson/AP
A US Post Office branch in Seattle. Photo: Elaine Thompson/AP

Stock markets around the world traded lower on Thursday, as US jobless numbers came in higher than expected and COVID-19 cases spiked in parts of Australasia.

About 1.3 million Americans filed for unemployment benefits over the last week, new figures showed, compared to expectations of 1.25 million.

The figure “cast a shadow” over stocks globally, according to Neil Wilson, chief market analyst at Markets.com.

“The mild risk-off tone to the start of the US session is keeping stocks in the red after a softer European session,” he said.

Read more: Another 1.3 million Americans filed for unemployment benefits last week

By mid-afternoon, the FTSE 100 (^FTSE) and the DAX (^GDAXI) were both down 0.3%, while the CAC 40 (^FCHI) had fallen by 0.4%.

The Dow (^DJI) and the S&P (^GSPC) both opened down 0.7% on Wall Street, while the Nasdaq (^IXIC) shed 1.1%.

Sentiment wasn’t helped by a tough session for Asian markets overnight. China’s Shanghai Composite dropped (000001.SS) 4.5%, the Hong Kong Hang Seng (^HSI) dropped 1.6%, and the Shenzen Component (399001.SZ) fell by 5.3%.

It came despite better-than-expected Chinese GDP numbers. Economic output grew by 11.5% month-on-month in June, beating expectations of a 9.6% rise.

“A miss on retail sales data seems to be weighing on Chinese bourses even as Q2 GDP surprised on the upside,” Deutsche Bank strategist Jim Reid wrote in a morning note to clients. Chinese retail sales fell by 1.8% in June, against a forecast of 0.3% growth.

Read more: 3 million UK jobs at risk from £35bn of unsustainable COVID-19 debt

“The jump in COVID-19 infections in the region seems to also be acting as an overhang,” Reid said.

Overnight, Tokyo raised its alert level to its highest point after recording 280 new confirmed COVID-19 cases.

Elsewhere, Victoria — Australia’s second largest state — recorded 317 new cases in 24 hours, which was the biggest single day increase in any Australian state so far.

Japan’s Nikkei (^N225) fell 0.7% and Australia’s ASX 200 (^AXJO) closed down 0.7%.

FRANKFURT AM MAIN, GERMANY - MARCH 12: Christine Lagarde, President of the European Central Bank, speaks to the media following a meeting of the ECB governing board at ECB headquarters on March 12, 2020 in Frankfurt, Germany. The ECB is pursuing measures to counter the economic impact of the rapidly spreading coronavirus. The number of confirmed cases across Europe has reached 25,000. (Photo by Thomas Lohnes/Getty Images)
Christine Lagarde, President of the European Central Bank. Photo: Thomas Lohnes/Getty Images

In Europe, the European Central Bank (ECB) kept interest rates unchanged and maintained its bond buying programme at the current level.

ECB President Christine Lagarde urged politicians to “quickly agree on an ambitious” rescue package for the EU, reiterating a message she has given over the last few months.

In the UK, unemployment figures came in better-than-expected. The headline unemployment rate remained at 3.9% even as employers shed 650,000 jobs since March.

Read more: ECB holds rates and bond-buying steady

Economists warned the numbers were likely disguising the true impact of the COVID-19 pandemic on the labour market.

“There’s little doubt that unemployment will rise over the coming months,” said James Smith, a developed market economist at ING.

Ladbrokes owner GVC (GVC.L) was the biggest faller on the FTSE 100. The stock dropped as much as 5% after the company announcing an 11% fall in first-half gaming revenue and the retirement of its chief executive.