Daily market review

United States

Equities seesawed higher Tuesday with focus on reports the US is considering a series of fiscal stimulus measures and as authorities step up public health efforts. The Dow industrials rose 5.2 percent, the S&P 500 gained 6.0 percent, and the NASDAQ was up 6.2 percent.

Reports said the White House is considering a package worth $1 trillion or more, and President Trump said he was open to direct payments to Americans. The Fed resumed its commercial paper backstop facility to address credit concerns, and big banks in concert tapped the discount window for emergency funding to remove the stigma for other banks to do the same. Many retailers announced store closures and withdrew their guidance.

Among sectors, defensives outperformed with utilities rallying. Energy and communication services were the only decliners.

Among companies in focus, Dow member Boeing dropped 4.2 percent to hold back the blue chip index on reports the company is discussing federal financing given its recent troubles with the 737 Max aircraft, and the added collapse of aviation. On the positive side, Amazon jumped 7.0 percent amid surging sales of household staples. Nordstrom's, the luxury clothing company, rose 8.8 percent despite withdrawing its guidance.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.12 to US$28.71, while gold rose US$35.50 to US$1,532.50. The US dollar rose sharply against major currencies. The US Treasury 30-year bond yield rose a very sharp 32 basis points to 1.64 percent while the 10-year note yield rose 31 basis points to 1.04 percent.


Hopes for fiscal and monetary stimulus lifted equities Tuesday. The Europe-wide STOXX 600 rose 2.3 percent as did the German DAX; both France's CAC and the UK's FTSE 100 rose 2.8 percent.

Markets reacted favorably to news of Fed action to backstop the US commercial paper market, and reports that the European Union and its members are considering large fiscal stimulus packages. The UK is also expected to unveil measures to bolster its economy, including hospitality and airline companies. The US also appears headed toward a bigger round of fiscal spending. In France, the financial authority AMF suspended short selling.

Among sectors, outperformers included telecom, utilities, chemicals, retail, personal and household goods, banks, and basic resources. Underperformers included travel & leisure, real estate, financial services, media, and industrial goods.

Among companies, ABN Amro, the Dutch bank, rose 7.3 percent and Volkswagen rose 2.5 percent despite saying they could not measure the potential impact of the pandemic. UK catering firm Compass dropped 7 percent on a similar warning. Airbus fell 7 percent after saying it would suspend production at its French and Spanish manufacturing sites.

In German economic data, analysts surveyed by ZEW are more pessimistic than expected this month, marking down sharply their assessment of current conditions and their expectations for future activity. The current conditions measure dropped 27.4 points to minus 43.1, a level not seen since March 2010. Expectations were slashed even more dramatically, diving from 8.7 to minus 49.5, their weakest reading since December 2011.

Asia Pacific

Major Asian markets posted mixed results Tuesday as investors continue to react to the economic and social impact of the global coronavirus pandemic.

After selling off very aggressively in recent sessions, Australia's All Ordinaries index rebounded strongly Tuesday, closing up 5.4 percent, with additional monetary and fiscal stimulus expected from Australian authorities in coming days.

The performance of Japan's Nikkei and Topix indices diverged, with the former up just 0.1 percent on the day but the latter advancing 2.6 percent, supported by the Bank of Japan's promise earlier in the week that it would purchase exchange-traded funds.

Hong Kong's Hang Seng index closed up 0.9 percent. Markets elsewhere in the region, however, closed lower on the day, including a small 0.3 percent decline for the Shanghai Composite index. Korea's Kospi index and Taiwan's TAIEX index closed down 2.5 percent and 2.9 percent respectively with the Strait Times, despite solid trade numbers from Singapore, down 1.7 percent.

Singapore's non-oil domestic exports rose 3.0 percent on the year in February after falling 3.3 percent in January, with stronger growth for both electronics exports and non-electronics exports. The rebound in headline exports growth was mainly driven by stronger demand from Japan and the European Union, offset by a sharp drop in exports to China. Total imports advanced 9.4 percent on the year after falling 0.9 percent previously.

Looking ahead*

On Wednesday in Asia/Pacific, the Japanese merchandise trade report is due. In Europe, HICP inflation and merchandise trade figures are scheduled. In the US, the housing starts report is on tap, plus Canadian CPI.

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