US investors eye stimulus after weak jobs stats

Marion Dakers
WEAK US jobless figures and lower inflation helped fuel an uptick on Wall Street yesterday, as traders took the data as a signal that a new round of quantitative easing is more likely.

The Labor Department reported 386,000 new claims for jobless benefits last week, an unexpected rise of 6,000 on the previous week.

And inflation fell sharply in May, with consumer prices dropping a steeper-than-expected 0.3 per cent. This was the biggest drop since 2008 and took annual inflation to 1.7 per cent. Inflation rose 0.2 per cent excluding food and fuel.

Meanwhile the US current account deficit widened to $137.3bn in the first quarter, the Commerce Department said.

“The fall in consumer prices will eventually provide a boost to both the household and corporate sectors, as it stems from lower fuel costs,” said ING economist Robert Carnell. “But it may be several months before we start to see some evidence of the power of low fuel prices in other activity data.”

Others said the readings could pave the way for the Fed to ratchet up its QE programme at next week’s policy meeting. “Pressure is mounting on the Fed to give the economy a shot in the arm,” said Chris Williamson at Markit.