US, Europe, Asia soft on virus fear

United States

US equities edged down Thursday and defensive sectors outperformed after China revised up its tally of coronavirus infections, and as the market fretted over the impact on companies operating in China. The Dow industrials fell 0.4 percent, the S&P 500 was off 0.2 percent, and the NASDAQ declined 0.1 percent. Despite the declines, the market held onto most of the strong gains so far this week.

Outperforming sectors included real estate, utilities, and consumer staples, with staples led by tobacco and household & personal care. Tech, materials, and communications services were also ahead. Lagging were financials, consumer discretionary, health care, energy, and industrials.

Among companies reporting earnings, Redfin, a real estate brokerage, rallied 19 percent after earnings and revenues beats. Applied Materials, the chip machinery maker, rose 3.1 percent after topping earnings expectations and raising its 2020 guidance. Equifax, the credit rating agency, rose 5.1 percent on earnings and revenues beats.

On the downside, food conglomerate Kraft Heinz dropped 7.6 percent on earnings and revenues misses and on Chinese sales concerns. Network hardware leader Cisco fell 5.2 percent on weaker orders and soft guidance. MGM Resorts declined 5.5 percent after an earnings miss and poor guidance linked to casino closures in China.

In US economic data, CPI edged only 0.1 percent higher in January though the year-on-year rate showed improvement, up 2 tenths to 2.5 percent. Core prices which exclude energy and food rose a monthly 0.2 percent though this year-on-year rate was unchanged at 2.3 percent for a fourth consecutive month.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 41 cents to US$56.52, while gold rose US$8.90 to US$1,578.70. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield fell 2 basis points to 2.06 percent while the 10-year note yield fell 1 basis point to 1.61 percent.


Risk-off sentiment returned Thursday after China revised upward its coronavirus infection totals, but decent corporate earnings kept the market afloat. The Europe-wide STOXX 600 eased 0.02 percent, the German DAX eased 0.03 percent, the French CAC slipped 0.2 percent, and the UK FTSE-100 dropped 1.1 percent. UK stocks underperformed as sterling rallied on expectations for a new UK cabinet and expansionary fiscal policy.

Among sectors in the STOXX 600, outperformers included insurance, financial services, chemicals, and health care, while riskier China-exposed sectors lagged, including oil & gas, autos & parts, travel & leisure, and basic resources.

Among companies in focus, Commerzbank rose 8.9 percent after reporting a smaller-than-expected Q4 loss. Credit Suisse rose 0.2 percent on an earnings beat, and Zurich Re, the Swiss insurer, gained 1.8 percent after topping 2019 expectations. Linde, a German industrial gas company, rose 2.7 percent after raising its 2020 guidance. On the downside, Nestle, a big weight in the indexes, fell 1.8 percent after revising its guidance lower.

Asia Pacific

Most major Asian markets closed lower Thursday after China authorities reported a large increase in the number of new coronavirus cases in Hubei province, though this increase was largely due to a change in reporting methodology to include "clinically diagnosed" cases. With official Chinese data limited for the next few weeks, investors focused on weak January auto sales data from a Chinese auto industry association, boosting concerns about the impact the virus will have on production and consumer spending. Meanwhile, foreign governments and airlines have continued to extend restrictions on travel to and from China.

The Shanghai Composite index fell 0.7 percent, Hong Kong's Hang Seng index dropped 0.3 percent, and Japan's Nikkei and Topix indices closed down 0.1 percent and 0.3 percent respectively. Australia's All Ordinaries index outperformed with a modest 0.3 percent increase on the day.

Japan's producer price index rose 1.7 percent on the year in January, picking up from 0.9 percent in December for the strongest increase since November 2018. On the month, the index rose 0.2 percent after increasing 0.1 percent previously. The increase in producer price inflation in January was mainly driven by a further acceleration in energy prices, with food price inflation relatively steady.

Looking ahead*

On Friday in Asia/Pacific, Japanese producer prices, Chinese new yuan loans, and India wholesale prices are scheduled. In Europe, German GDP flash, Swiss producer and import prices, and Eurozone GDP flash figures are due. In North America, US retail sales, US import and export prices, US industrial production, US business inventories, and US consumer sentiment reports are scheduled.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

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