By Caroline Valetkevitch
NEW YORK (Reuters) -Global stock indexes were little changed on Thursday with the S&P 500 holding just shy of the 5,000 level, while the U.S. dollar inched higher after U.S. unemployment benefits data underscored the view the Fed will not need to cut rates soon.
The subdued trading in equities followed overnight gains in Asia, with China’s recent support measures, and reassurances that Japan’s interest rates will not shoot up, supporting stocks.
A Labor Department report showed earlier Thursday that Americans filing for state unemployment benefits dipped to 218,000 during the week ended Feb. 3, compared with economists’ forecast of 220,000.
Both Fed and European Central Bank policymakers, but also some big emerging markets, have been pushing back against expectations of rapid cuts in recent weeks as they try to gauge whether the inflation spike that began two years ago really has been tamed.
The likelihood of a Fed rate cut in March slipped 2-1/2 percentage points from Wednesday to 16.5%, according to CME Group’s FedWatch Tool. The probability a week ago, before the unemployment report, was 36.5%.
“We continue to get positive surprises in the U.S. and we’re not getting enough positive surprises in the rest of the world, and certainly not in China,” said Thierry Wizman, global FX and interest rates strategist at Macquarie in New York.
The dollar index was last up 0.2% at 104.26, after hitting 104.43 following the initial claims report.
The dollar was up about 0.8% versus the yen at 149.40. Bank of Japan Deputy Governor Shinichi Uchida said the central bank was unlikely to raise interest rates aggressively, even after exiting negative interest rates.
The Dow Jones Industrial Average fell 68.08 points, or 0.18%, to 38,609.28, the S&P 500 lost 0.38 points, or 0.01%, to 4,994.60 and the Nasdaq Composite gained 49.80 points, or 0.32%, to 15,806.45.
The MSCI world equity index, which tracks shares in 49 nations, lost 0.06%, while European stocks were flat.
In Asia, Japan’s Nikkei surged 2.1% to close at its highest level in 34 years, helped in part by the BOJ’s comments.
The Shanghai composite index is up 4.9% since Monday, the biggest weekly gain since November 2022, and CSI the blue-chips index is going for the same, up 5.8%. [.SS]
Investors have taken leadership change at the top of China’s market regulator, announced on Wednesday, as another sign that authorities are taking note of the pain.
Also, data showed China’s consumer price index was down 0.8% in January from a year earlier, the biggest drop since 2009, although on a monthly basis, CPI rose 0.3%, picking up from the previous month.
U.S. Treasury yields rose ahead of a U.S. Treasury Department auction of 30-year bonds on Thursday.
Benchmark 10-year notes gained 5 basis points on the day to 4.148%. They were holding below an 11-day high of 4.177% reached on Monday.
West Texas Intermediate crude futures rose 1.96%, or $1.43, to $75.31 a barrel. Brent crude rose 1.94% , or $1.54, to $80.75. Spot gold fell 0.1% to $2,032.26 an ounce.
(Additional reporting by Herbert Lash and Karen Brettell in New York, andMarc Jones in London; Editing by Susan Fenton and Nick Macfie)
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