Daily market review

United States

Aggressive accommodative steps from central banks and more promises of aid from President Trump helped stocks recover slightly Thursday, but major indexes retreated at the close from afternoon highs. The Dow industrials rose 0.9 percent, the S&P 500 0.5 percent, while the NASDAQ jumped 2.3 percent.

Markets appeared somewhat impressed by concerted rate cuts, quantitative easing from major central banks, extension of dollar swap lines overseas, and movement toward fiscal support in the US. The latter could include near-term direct payments to US families. Separately, oil prices popped up on reports the US may seek to mediate the dispute over output between Russia and Saudi Arabia.

Positive analyst commentary on beat-up consumer stocks provided a lift in a market off roughly 30 percent in one month. Outperforming sectors included energy, consumer discretionary, and communications services. Utilities, consumer staples, health care were the worst performers.

Among companies in focus, Guess, the clothing company, surged 125 percent on positive analyst commentary after an earnings beat. Rideshare leader Uber rallied 38 percent after saying it has cash to ride out the crisis. Williams-Sonoma, the luxury cooking equipment retailer, rose 25 percent on earnings and revenues beats, despite withdrawing its guidance.

Notable decliners included Harley-Davidson, the motorcycle company, off 7.3 percent after suspending US production, and amid a management shakeup. Align Technology, the orthodontic equipment maker, fell 2.4 percent due to the closure of dental offices. Vail Resorts was off 1 percent after closing for the rest of the ski season. Ford fell 0.8 percent after suspending its dividend and tapping its credit line and withdrawing guidance.

In US economic data, first-time jobless claimants rose by a much greater-than-expected 70,000 in the March 14 week. The total, now at 281,000, had been at historic lows but is now the highest in 2-1/2 years. Meanwhile, the Philadelphia Fed index, like Empire State earlier in the week, was hurled back this month by the coronavirus. At minus 12.7, the index fell nearly 50 points from February's oddly optimistic 36.7.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.41 to US$28.28, while gold fell US$12.70 to US$1,481.40. The US dollar rose sharply once again against major currencies. The US Treasury 30-year bond yield rose 3 basis points to 1.81 percent while the 10-year note yield fell 1 basis point to 1.17 percent.


Equities ended higher in volatile trading as markets processed new stimulus measures and the rapid spread of the coronavirus, and widening shutdowns. The Europe-wide STOXX 600 rose 2.9 percent, the German DAX rose 2.0 percent, the French CAC gained 2.7 percent, and the UK FTSE-100 was up 1.4 percent.

The European Central Bank unveiled a new, open-ended quantitative easing program; the Reserve Bank of Australia cut rates and announced QE; the Bank of England cut rates again and boosted its QE; the US Federal Reserve expanded its credit support programs -- steps all seen as supportive for markets, alongside more promises of aid from President Trump.

Outperformers included food & beverages, telecom, oil & gas, insurance, media, and health care while lagging were basic resources, autos, utilities, retail, travel, and industrials.

Lufthansa, whose shares have already fallen in half, jumped 10.5 percent after cutting capacity by 95 percent and warning the airline industry may need a bailout to survive. Hugo Boss, the German retailer, fell 6 percent after withdrawing guidance on the virus effect. Osram Licht, the German lighting manufacturer, fell 15 percent after warning it would miss its targets. On the positive side, Credit Suisse jumped 11 percent after saying its business was holding up in the face of virus headwinds.

In economic data, Ifo said German business sentiment fell to 87.7 in March from 96.0 in February. This was the biggest drop since 1991 and puts the measure at its weakest level since August 2009. The current conditions gauge fell 5.2 points to 93.8 while expectations were down 11.2 points at 82.0.

Asia Pacific

Most major Asian markets continued to sell off aggressively Thursday, with policy measures aimed at countering the economic impact of the pandemic not reassuring regional investors that conditions will stabilize soon.

The main indices in Korea, Taiwan, and Singapore closed down 8.4 percent, 5.8 percent, and 4.7 percent respectively. Australia's All Ordinaries index fell to a four-year low, closing down another 3.8 percent on the day, while the Australian dollar sold off further to trade at levels not seen in 18 years.

Hong Kong's Hang Seng index and the Shanghai Composite index closed down 2.6 percent and 1.0 percent respectively. Japan's Nikkei index also closed down 1.0 percent but investor expectations of Bank of Japan asset purchases again provided support to the broader Topix index, closing up 1.0 percent.

The Reserve Bank of Australia announced Thursday additional policy measures to respond to the economic impact of the pandemic, including another 25 basis points cut in the main policy rate to a new record low of 0.25 percent. This was the first unscheduled change in policy rates since 1997. Officials have also introduced an asset purchase program that will aim to keep the yield on 3-year government bonds close to 0.25 percent and have established a funding facility that will make available at least A$90 billion for banks to lend to businesses at a fixed rate of 0.25 percent, with a particular focus on small and medium-sized enterprises.

Japanese data showed headline CPI inflation falling from 0.7 percent in January to 0.4 percent in February, with underlying measures of inflation also moderating. In other data, New Zealand's economy expanded 0.5 percent on the quarter in the three months to December, moderating from upwardly-revised growth of 0.8 percent in the three months to September.

Looking ahead*

On Friday in Europe, German PPI and UK public sector finance reports are scheduled. In North America, US existing home sales and Canadian retail sales figures are on tap.

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