Morning Market Update March 7

The Dow Jones Industrial Average is forging new territory this morning as it continues hitting new all-time highs. First-time jobless claims for last week were reported to be 340,000, 7000 less than last month. The rolling four-week average for newly unemployed claims has dropped to a five-year low. This news has made Wall St. happy, and has raised expectations that tomorrow’s highly-anticipated payroll report will show gains in employment. Continuing jobless claims stood at 3.09 million.

The U.S. trade deficit unexpectedly rose, due to increased oil imports. Speaking of oil, futures today are lower upon news that the Brent offshore pipeline has been repaired, and the 27 North Sea oil fields can resume pumping oil ashore. The dollar is also lower today, reducing the bite on precious metals prices. A strengthening dollar has taken a major bite out of PMs, reducing gains by almost half in recent trading.

In Europe, both the European Central Bank and the Bank of England left interest rates unchanged at yesterday’s meetings. This helped halt the slide of both the euro and the pound. After the ECB meeting, chairman Mario Draghi told reporters that there was no danger of “contagion” spreading from Italy following the split election there. He remarked that ECB policy for helping EU countries in need by outright purchases of sovereign bonds were the same for all nations, and that Italy would have to abide by the same conditions as everyone else if they needed central bank intervention. Also in Europe, the latest Spanish bond sales went well, which helped calm markets a bit.

In Asia, the Bank of Japan announced no changes in policy in its last meeting before a new chairman takes over. New prime minister Abe has called on the central bank to combat the persistent deflation the country has been struggling against. The Nikkei stock index hit another 4.5 year high overnight, but was off the intraday peak on profit taking. The yen was weaker in trading. In China, stocks were down as market-leading bank stocks declined. Hong Kong market was flat.

Gold and silver have given up early gains on the dip in U.S. jobless claims, while the Platinum Group Metals (PGMs) were boosted by a stronger euro. Gold remains stuck in an extremely tight range this week. Major U.S. and Chinese economic data on Friday may provide the impulse to break one way or the other.

by David Peterson

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