11:50 AM New York – U.S. market index traded higher and weekly jobless claims declined 9,000 to 323,000. Service industry index tracked by a private company showed an expansion in the U.S. Auto sales in August were the best in five years as consumers show willingness to replace ageing vehicles.
U.S. stocks traded higher after the release of weekly jobless claims and non-manufacturing index and ahead of monthly employment report scheduled tomorrow.
Initial jobless claims declined 9,000 to 323,000 in the week ending on Aug 31 and the Labor Department is scheduled to report jobless rate and payroll data tomorrow.
A private survey showed non-manufacturing index increased to 58.6 in August from 56 in July, according to the Institute for Supply Management.
Market sentiment was positive despite the rising tensions in the Middle East and growing possibilities of the Fed tapering as early as next month and the uncertainties linked to U.S. debt ceiling negotiations.
S&P 500 index increased 3 to 1,656.07 and the Nasdaq Composite Index gained 9.13 to 3,658.17.
ECB Lifts GDP Outlook
In London, FTSE 100 index increased 49.13 to 6,526.87 and in Frankfurt, DAX index gained 24.13 to 8,220.05.
The European Central Bank lifted its outlook for GDP in the current year to a shrinkage of 0.4% from the earlier estimate of 0.6% in June.
The central bank also lowered its estimate for the economic growth in the next year to 1% form 1.1% and President Mario Draghi reiterated inflation outlook below central bank’s target of 2%.
Bank of England left its key interest rate on hold at 0.5% and left its bond buying program intact at 375 billion bonds.
The yield on 10-year UK gilt increased to a 2-year high to 2.95% and pound rose to $1.566.
Japan and India in Focus
In Asian markets, indexes generally closed higher. Shipping companies led the gainers in Tokyo after the freight rate index soared 4% indicating rising ocean freight rates for routes between Asia and Europe and Asia and North America.
Nikkei index gained 0.1%, Hang Seng index added 1.2%, and indexes in Thailand and South Korea added 1%.
Sensex index in Mumbai soared 2% after the recently appointed central bank governor Rajan clarified rules for bank operations and also proposed to lower government debt holdings required by private banks and directed more lending to the private sector.
The move is expected to open more lending to the private sector and support economic growth in the long term and ease pressure on the rupee. The currency gained 1.2% to 66.21 against a dollar after plunging to a record low this week.
U.S. Stocks in Review
Astex Pharmaceuticals Inc increased 3% after Japan based Otsuka Holdings Co offered the company to acquire for $886 million or $8.50 a share.
Costco Wholesale Corp increased 3% after the largest warehouse club operator said August sales at U.S. locations increased 5%, excluding fuel.