London morning: Wall Street higher, Nikkei 225 -2.65%, US jobless claims due

US equities closed higher on Wednesday, with the S&P 500 up 0.58% at 7757.17 and the Nasdaq 100 up 1.13% at 29822.52. Japan's Nikkei 225 stood at 62907.84 in the Tokyo afternoon on Thursday, a change of -2.65%.

What happened

The S&P 500 ended the session on Oct. 21 at 7757.17 points. That is a gain of 44.6 points from the previous close of 7712.57, or 0.58%. The reading is as of the 16:00 New York close.

The Nasdaq 100 closed at 29822.52. Its percentage gain was larger than that of the S&P 500 over the same session.

The two US benchmarks therefore ended the day with gains of different size. The S&P 500 moved up by 0.58%, while the Nasdaq 100 moved up by 1.13%.

Asia and currencies

The Nikkei 225 stood at 62907.84 in the Tokyo afternoon on Oct. 22. The previous close was 64621.24.

The Tokyo reading is an afternoon level, so it can change before the close of the Japanese session. It is the only equity benchmark in this morning's data that moved lower.

In currency markets, EUR/USD stood at 1.1245 at 07:00 UTC, which is 08:00 in London. The pair is up 0.0010, or 0.09%, from the previous close of 1.1235. The move is small in size.

The jobless claims calendar

The main scheduled data point of the day comes from the US labor market. At 12:30 UTC, three weekly claims figures are due. All three are listed as high-impact events on the calendar.

Initial Jobless Claims for the week ending Oct. 17 carry an estimate of 200 K. The previous reading was 199 K. The figure has not been published yet.

The Jobless Claims 4-Week Average for the same week has an estimate of 200 K, against a previous reading of 198.5 K. The 4-week average smooths the weekly series, so it moves less from one release to the next than the single-week figure.

Continuing Jobless Claims for the week ending Oct. 10 have an estimate of 1720 K. The previous figure was 1710 K. Continuing claims refer to an earlier week than initial claims, which is why the two dates differ in the calendar.

Background and previous values

The previous values give the starting point for each release. Initial claims were last reported at 199 K, the 4-week average at 198.5 K and continuing claims at 1710 K. The new releases will be read against those levels once the actual figures are published at 12:30 UTC.

Initial claims count people who filed for unemployment benefits for the first time in the reference week. Continuing claims count people who keep receiving benefits. Together with the 4-week average, the three series describe the labor market from slightly different angles.

On the equity side, the previous closes provide the reference for the day's moves. The S&P 500 was at 7712.57 and the Nasdaq 100 at 29490.28 before Wednesday's session ended. The Nikkei 225 was at 64621.24 before Thursday's trading in Tokyo.

For the euro, the reference is the previous close of 1.1235. The pair has moved 0.0010 from that level at the time of writing. Such a small change leaves the currency close to where it stood before the European morning began.

Why it matters

Weekly claims are among the most frequent readings on the US labor market. They arrive every week and are followed by market participants who track employment conditions. The figures due today are the next update after an initial claims reading of 199 K and a continuing claims reading of 1710 K.

The overnight moves show a split between regions. US benchmarks finished higher, and the Nasdaq 100 rose by a larger percentage than the S&P 500. The Nikkei 225 stood at -2.65% in Tokyo. This morning's data carry no explanation for the Tokyo move, so it is reported here as it stands.

The euro is little changed against the dollar. The 0.09% rise in EUR/USD is small next to the equity moves in the US and in Japan. Currency markets may react to the claims data once it is published, since it is the main scheduled US release in the calendar for the day.

For European investors, the London morning combines a positive US close with a lower Asian session. The two signals point in different directions, and the first scheduled data of the day comes only after European trading has begun.

What to watch next

The first scheduled test comes at 12:30 UTC with the three jobless claims releases. Initial claims have an estimate of 200 K, the 4-week average an estimate of 200 K, and continuing claims an estimate of 1720 K. The reaction of the dollar and of equity markets after the data is the next point to follow.

The Italian Stock Exchange session runs from 09:00 to 17:30 Rome time today. It will trade through the release of the US data. The US cash session opens after the European markets have been trading for several hours.

Market participants will also follow where the Nikkei 225 finishes its Tokyo session, compared with the 62907.84 level seen in the afternoon, and where EUR/USD stands relative to 1.1245 as the day progresses.

Futures and cash indexes in Europe will also take their cue from the Wall Street close of 7757.17 on the S&P 500 and 29822.52 on the Nasdaq 100. The claims figures will then provide the next fresh input from the US economy.