Stronger Jobless Claims and Trade Talk Progress Lift Dow

A rebound in treasury yields, progress in US – Sino trade talks and better than forecast jobless claims has boosted sentiment, increasing demand for risker assets. However downward revision to US economic growth is keeping gains capped.

Stronger than forecast jobless claims
US jobless claims fell to their lowest level in 2 months last week. This offered traders some reassurances as to the health of the US labour market after February’s surprisingly weak jobs report.

US GDP cut
The US economy slowed by more than expected in Q4, keeping growth across 2018 below the 3% annual target. Growth fears are front and central to the markets right now, after the Federal Reserve doubled down on dovish rhetoric. As investors are adjusting to the more accommodative stance, US 10-year treasury yields have rebounded off 15-month lows. Sentiment has improved and financials and banking stocks are moving higher.

Trade talk progress
Trade talks are back on the agenda and “progress” is doing a good job of distracting traders, from global growth concerns. The fact is that we have hear that progress is being made for many months. Whilst today this is enough to keep the markets buoyant, more solid evidence is needed in order to put the bulls firmly back in control.

Traders will now look ahead to US PCE data due tomorrow, for further assessment of the health of the US economy.

After the Dow climbed steadily higher across the start of the month, it is now trading in a steady holding pattern. We would be looking for a meaningful move above 26000 to confirm another leg northward. Alternatively, a move below 24000 could indicate the bears are in control.

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