The S&P/ASX 200 Index (ASX: XJO) is ending the week with a bang!
In early afternoon trade on Friday, the benchmark Australian index is up an impressive 1.4%.
Barring a major afternoon turnaround, the ASX 200 should close in the green for three of this week's five trading days.
This will surely come as welcome news to investors (save a few short sellers), who watched the index of the top 200 Aussie companies tumble 2.1% last Friday and fall a precipitous 3.7% on Monday.
Part of today's boost can be credited to strong earnings results reported by some top ASX 200 companies this morning. Those include REA Group Ltd (ASX: REA), up 4.0%, and Life360 Inc (ASX: 360), up 18.2% at the time of writing.
But I reckon most of the rebound comes as the macroeconomic currents blowing out of the United States have once more flipped from headwinds to tailwinds.
What else is boosting the ASX 200 today?
The global stock market rout that took the ASX 200 down with it last Friday and Monday was driven by fears that the Federal Reserve had waited too long to cut interest rates and that the US economy was heading into recession.
However, the latest data from the US Labor Department has quelled those fears, with investors again hopeful of a 'soft landing' for the world's biggest economy.
According to the Labor Department, last week's jobless claims declined by 17,000 to a seasonally adjusted 233,000. That came in below consensus expectations and portends a resilient US economy despite elevated interest rates.
Like the ASX 200, US stock markets rallied on the news.
The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) closed up 2.9% overnight, while the S&P 500 Index (SP: .INX) ended the day up 2.3%.
Commenting on the wild market swings this past week, Social Finance's Liz Young Thomas said (courtesy of Bloomberg):
It has been quite a week. Up, down, and all around. We learned how sensitive markets now are to cooler US economic data, how broad reaching the impact of the yen carry trade can be, and how conditioned investors are to expect interest rate cuts as the salve for every scrape.
Noting the strong rebound in US stocks that's helping drive the ASX 200 higher today, Apollo Global's Torsten Slok said (quoted by The Australian Financial Review), "There is still no evidence of a recession or a sharp slowdown in the [US] economy."
Santander chief US economist Stephen Stanley pointed out that the latest report indicated that job losses in the world's top economy don't appear to be accelerating.
According to Stanley:
This adds further to my confidence that the relatively steep backup in the unemployment rate over the past several months is not an accurate indication of what is happening on the ground in the labour market.
With today's intraday moves factored in, the ASX 200 is up 6.1% since this time last year.
