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MARKETS

US stocks took off like “ Falcon Heavy” on Thursday, sky-rocketing up the charts after a whiff of surprisingly good news from weekly initial jobless claims hinted at a much better-than-expected US labour market. The S&P 500 bulged its chest, pumping up nearly 2.4%, while the tech-savvy Nasdaq vaulted over 3%. Not to be left in the dust, the Dow Jones Industrial Average strutted its stuff, swaggering up nearly 1.8% or a jaw-dropping 700 points.

Indeed, this wasn't just any ordinary rebound but a comprehensive surge. Every sector within the S&P 500 notched gains, catapulting the index to its most significant rally since November 2022. As confidence surged back into the market, Treasuries saw a broad retreat, particularly in the shorter maturities, which nudged the US dollar higher. Against the backdrop of a jittery yen in the Tokyo market, this dollar strengthening should act as a positive omen for Tokyo exporter shares, signalling potential uplifts ahead.

The recent U.S. tech turmoil that erupted on July 11th seems to be simmering down at last. Technology index and the star-studded 'FANGS' lineup have clawed their way back, recovering from the depths.

The comeback received a turbo boost on Thursday, thanks to META Platforms' earnings smashing past expectations, which pumped a healthy shot of optimism into the tech veins.

In a market that's been desperately seeking a semblance of calm after this week's unexpected surge in volatility, there's now a hint of relief in the air. The tech wreck, which had investors on edge, appears to have eased off the accelerator, and underneath all the chaos, the real economy is less wobbly than expected. This newfound equilibrium provides a much-needed pause—a chance for traders to catch their breath and regroup after riding through the recent storm of market turbulence.

With its weekly appearance and moody disposition, the Jobless Claims series typically doesn't stir the market pot too much. Yet, it remains a pivotal barometer, especially in a market soaked with frantic calls for emergency rate cuts and murmurs that the Fed is playing catch-up with economic realities. This week's heightened attention was undoubtedly stoked by last week’s dismal non-farm payroll report, which sent markets spiralling down faster than a rollercoaster drop, flipping the script where suddenly bad news was, indeed, just bad news.

The global market drama has been scripted around two main story arcs. In one corner, there’s the spectacular unwind of carry trades, with Tokyo and the currency markets caught in the eye of the storm. The yen, a darling funding choice for Japan’s retail tycoons on their global investment escapades, supercharged the fallout, but the soft US labour data really set off the fireworks. This beefed up the yen and set in motion perhaps the grandest carry trade unravelling ever witnessed.

But hold your hats; there’s another plot twist—it’s the steamy middle of August, notorious for its market theatrics. Let’s say that market volatility in August doesn’t just swing; it does a full-on disco twirl, especially in a market still licking its wounds from recent turbulence. Welcome to the 'Dog Days of Summer,' when Wall Street’s trading floors are as ghostly as a beach in a storm, with traders swapping market charts for margaritas. This scant attendance can dilute market liquidity and amplify price swings, as there aren’t enough market mavens around to smooth out the ripples from hefty news or big trades.

ASIA LIFT OFF

As Asia’s markets gear up to close out a tumultuous week, a real sense of optimism is in the air, fueled by Thursday's blazing rally in U.S. equities. Yet, as the open approaches, the mood is tinged with some apprehension, with your typical China bears placing a few markets on a potential spoiler. The much-anticipated Chinese inflation data is a pivotal moment that could dampen spirits. Should it unveil ongoing deflationary pressures within the world's second-largest economy, it might well douse the flickering flames of this newfound market optimism.

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