US open: Stocks higher after better-than-expected jobless claims

US stocks were trading higher on Thursday after better-than-expected employment data, while investors were also digesting news that the Federal Reserve will start unwinding its $4.5trn balance sheet this year.

At 1554 BST, Dow Jones Industrial was up 0.15% to 20,678.18, the S&P 500 rose 0.13% to 2,356.01, and the Nasdaq added 0.09% to 5,869.86.

Meanwhile, West Texas Intermediate was up 1.1% to $51.72 per barrel and Brent crude rose 1.03% to $54.93.

In currency markets, the dollar was down 0.12% against the pound to 0.8001, flat against the euro at 0.9380, and 0.16% firmer versus the yen at 110.88.

Stocks were buoyed as data showed that number of Americans filing for unemployment fell more than expected last week, ahead of Friday’s non-farm payrolls

US initial jobless claims were down 25,000 to 234,000 from the previous week's level, which was revised up by 1,000 to 259,000. The four-week moving average came in at 250,000, down 4,500 from the previous week's average, which was revised up to 254,500 from 254,250.

Michael Hewson, chief market analyst at CMC Markets said that the sharp drop in initial jobless claims "appear to suggest a tightening labour market, but does contrast with yesterday’s bumper ADP numbers, which suggested that there still remains a significant amount of slack in the US labour market".

Investors were also still mulling Wednesday’s Federal Reserve minutes, which revealed that the central bank was ready to start cutting its balance sheet before the end of the year.

The minutes from the March meeting, when officials approved a 0.25 basis point interst rate hike to between 0.75% and 1%, revealed that the Fed plans to start shedding the $4.5trn in bonds it is holding on its balance sheet.

The minutes said that the reductions should be “gradual and predictable” through the “phasing out” of reinvestments.

Russ Mould, investment director at AJ Bell, said that while any such move to reduce the size of the balance sheet and ‘sterilise’ quantitative easing will be seen by some as the ultimate sign of the bond-buying scheme’s success – namely that the US economy is back on track a decade after the first signs of sub-prime mortgage distress became clear and is capable of functioning without emergency support.

“The FOMC minutes offer no promises of sterilisation and stress that any move to withdraw this stimulus would be made gradually, mirroring the baby steps made under Janet Yellen to tighten monetary policy via three interest rate increases so far (since December 2015) and the decision to stop adding to quantitative easing in 2014.

"The battle lines are now drawn between bulls, looking forward to a healed US economy and one fired up by the proposed Trump reform programme, and bears pointing toward historically very high valuations on a market-cap-to-GDP and cyclically-adjusted price earnings (CAPE or Shiller PE) basis, moderate corporate profit momentum and the withdrawal of quantitative easing as key obstacles toward fresh advances in US stocks."

Elsewhere, European Central Bank president Mario Draghi was moved to dispel rumours that there will be and to negative interest rates and that it will be raised this autumn.

The minutes of the ECB’s March were meeting were also released on Thursday and showed that it was facing pressure from the heads of the French, German, Spanish and Dutch central banks over its assessment of the Eurozone economy.

Back in the US, investors are also eyeing the meeting of President Donald Trump and his Chinese counterpart at Trump’s Mar-a-Lago resort in Florida. At the two-day summit the world leaders are expected to discuss trade and reigning in North Korea’s nuclear ambitions.

In corporate news, retailers rallied after recent sell-offs with L Brands climbing 10.16%, Bed Bath & Beyond rising 6.46%, Staples up 2.10%, and Kohl’s Corp 5.92% higher.

Sunoco surged 19.66% after 7-Eleven owner Seven & I Holdings said it would buy over 1,000 stores and petrol stations from the oil company for $3.3bn.

Constellation Brands gained 7.55% after the drinks company reported strong fourth quarter earnings due to whiskey sales.