June 07, 2012-Stocks Trade Higher on US Jobless Data and Euro Optimisim

The major U.S. index futures are pointing to a higher opening on Thursday, with sentiment turning markedly positive after the People’s Bank of China announced an interest rate cut. Earlier in the European session, sentiment wobbled slightly, as traders anxiously looked ahead to Federal Reserve Chairman Ben Bernanke’s testimony. The positive momentum among Asian stocks was strengthened after Australia reported strong job numbers. The jobless claims report revealed a bigger than expected drop in claims, offering some relief to markets. The People’s Bank of China reduced rates on 1-year loans and one-year deposits by quarter basis points each . The central bank also said banks can offer loans at a 20 percent discount to the benchmark lending rate. Though the move can be construed as suggesting the risks facing the global economy, it would only strengthen stimulus hopes, which have set in motion a strong rebound in markets. The major U.S. averages opened modestly higher on Wednesday and advanced steadily in the morning, as conviction about central banks announcing more stimulus increased after the Reserve Bank of Australia’s 25 basis point rate cut. The optimism was sustained even after the European Central Bank did not announce any additional stimulus.