Daily market review

United States

US stocks recovered Tuesday as many traders considered prices oversold after Monday's steep losses on Chinese coronavirus worries, and with help from positive US economic data. The Dow industrials rose 0.7 percent, the S&P 500 gained 1.0 percent, and the NASDAQ was up 1.4 percent, as riskier growth sectors led the gains.

Dow stocks posted mixed earnings, with weakness at 3M and Pfizer, but strength at United Technologies. US consumer confidence and Richmond Fed manufacturing reports surprised to the upside.

Among sectors, technology shares led the way, with chipmakers recovering much of their China-inspired losses of Monday. Financials improved as banks benefited from a rebound in interest rates. Communications services improved, with entertainment stocks leading. Laggards included materials, energy, and health care. Defensive plays including real estate and utilities lagged the most given the risk-on mood.

Among the Dow components, 3M fell 5.7 percent after cutting its guidance and announcing layoffs and a restructuring. Pfizer fell 5.1 percent on disappointing earnings and weaker guidance. On the positive side, United Technologies rose 1.2 percent after its earnings and revenues beat expectations.

In US economic data, the consumer confidence index, at 131.6 in January, came in near the top end of Econoday's consensus range and included strongly positive indications on the labor market. Separately, manufacturing activity strongly accelerated in January, according to the latest survey from the Richmond Fed, whose composite index jumped 25 points to 20, putting it firmly in expansionary territory following two months of contraction. In another report, a big gain for defense aircraft salvaged an otherwise lackluster if not outwardly weak durable goods report for December. New orders rose 2.4 percent in a monthly gain offset in part by a sharp downward revision to November, from an initial decrease of 2.0 percent to a drop of 3.1 percent.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 52 cents to US$59.66, while gold fell US$13.10 to US$1,574.20. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield rose 4 basis points to 2.10 percent while the 10-year note yield rose 4 basis points to 1.64 percent.


European equities recovered some of the prior day's heavy losses Tuesday as markets recovered their equilibrium with help from a positive start on Wall Street. The Europe-wide STOXX 600 rose 0.8 percent, the German DAX gained 0.9 percent, the French CAC rallied 1.1 percent, and the UK FTSE-100 was up 0.9 percent.

Markets continued to focus on the impact of the Chinese coronavirus, but the situation has not worsened as much as markets initially feared, and many sectors appeared oversold. Telecom, insurance, autos, and banks outperformed, while technology, food & beverage, and real estate lagged.

China-exposed luxury stocks rebounded after sharp losses Monday. LVMH, the French luxury goods conglomerate, rose 2.7 percent after dropping 3.7 percent Monday. Airlines, hit hard by the virus worries Monday, rebounded, with Lufthansa up 1.4 percent. Swedbank, the Swedish savings bank, rallied 6.4 percent on a big earnings beat.

In economic news, the UK CBI's January Distributive Trades Survey suggested little change in retail conditions around the turn of the year. The balance of respondents reporting an increase in volume sales versus a year was again zero percent, matching the December outturn. In addition, at also zero percent, the forecast is for no growth again in February. Separately, the Swiss merchandise trade surplus narrowed sharply in December. At CHF1.96 billion, the black ink was down from CHF3.95 billion in November and at its lowest level in 2019. However, it was essentially unchanged from a year ago.

Asia Pacific

Markets in China and Hong Kong were again closed for lunar new year holidays Tuesday, with markets elsewhere in the region generally weaker. The regional data calendar was again clear Tuesday, with investors still mainly focused on the coronavirus outbreak as Chinese authorities reported more cases and fatalities.

Australia's All Ordinaries index closed down 1.5 percent on the day, while Japan's Nikkei and Topix indices both fell 0.6 percent. Several regional airlines, including Qantas Airways, Singapore Airlines and Korea Air, posted large declines as concerns escalated about the impact the outbreak will have on travel volumes.

Looking ahead*

On Wednesday in Asia/Pacific, Australia CPI data are scheduled. In Europe, the following are scheduled: German Gfk consumer climate, Eurozone M3 money supply, and Italian business and consumer confidence reports. In North America, the FOMC will announce its policy decision, and US international trade and US pending home sales figures will be released.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies