Daily market review

United States

Hopes for the big US stimulus package and for coordinated fiscal action from Europe helped equities rise again in volatile trading Tuesday, but most major indexes ended below highs, and the tech-heavy Nasdaq slipped. The Dow industrials gained 2.3 percent, the S&P 500 rose 1.1 percent, and the NASDAQ eased 0.5 percent.

Most sectors rose, with industrials (especially airlines) leading, along with energy, financials, especially credit card companies, up strongly. Laggards included consumer staples, especially grocers, and communication services, including internet companies.

Nike, the sportswear company, surged 9.1 percent on upbeat earnings and positive management comments, while Boeing jumped 24 percent on the stimulus package, which includes money for the company, and a report that its Max 737 aircraft may resume production in May.

Among other companies in focus, Facebook fell 3 percent after saying its usage has surged lately but its ad revenues have not. Ross Stores rose 14 percent after an upgrade at Goldman Sachs. Winnebago, the trailer company, jumped 21 percent as markets expected its sales to rise post-virus.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 48 cents to US$27.69, while gold fell US$24.70 to US$1,642.20. The US dollar fell sharply against major currencies. The US Treasury 30-year bond yield rose 1 basis points to 1.41 percent while the 10-year note yield was unchanged 0.84 percent.


Expectations of a huge US stimulus package and hopes for a similar Eurozone package lifted equities in volatile trading, with sectors that have suffered the most lately, such as travel, leading the rebound. The Europe-wide STOXX 600 gained 3.1 percent, the German DAX rose 1.8 percent, the French CAC rallied 4.5 percent, and the UK FTSE-100 also gained 4.5 percent.

Markets were confronted with a rising COVID-19 death toll and shutdowns across Europe, in addition to a sharp rise of cases in the US. On the positive side, equity markets liked reports that the Eurogroup would use the ESM mechanism to assemble a coordinated package of support for the regional economy.

In addition to travel and leisure, outperforming sectors also included oil & gas, insurance, construction, financial services, basic resources, media, industrials, food & beverage, and banks. Underperforming were chemicals, telecom, real estate, health care, technology, and retail.

Among companies in focus, Virgin Money UK, a bank, surged 27 percent in a rebound from its recent selloff. German online commerce business Zalando jumped by 7 percent despite warning on the virus impact on business. Airlines rallied, with Easyjet leading, up 20 percent.

Asia Pacific

Asian markets recorded broad-based gains for the second consecutive day Wednesday after the sharp bounce in US markets Tuesday and news during the regional trading session that the US Senate had tentatively agreed to a $2 trillion stimulus package to combat the economic impact of the coronavirus pandemic. Japan's Nikkei and Topix indices outperformed, up 8.0 percent and 6.9 percent respectively, while Australia's All Ordinaries index also extended the gains made yesterday with an increase of 5.3 percent. Hong Kong's Hang Seng index closed up 3.8 percent, while the Shanghai Composite index advanced 2.2 percent.

The Bank of Japan published Wednesday a summary of a special meeting of its Monetary Policy Board held last week. Members of the MPB left the short-term policy rate on hold at this meeting but agreed to implement "enhanced monetary easing", consisting of increased supply of funds to purchase Japanese government bonds, an additional lending program, and purchases of exchange-traded funds and real-estate investment trusts. The summary, not surprisingly, showed that the economic impact of the pandemic was the main focus of discussion, with some MPB members expressing grave concern that the impact on Japan will be prolonged and extend even after other global economies recover.

New Zealand's merchandise trade balance swung from a revised deficit of NZ$414 million in January to a surplus of NZ$594 million in February. With trade flows impacted by the pandemic, growth in New Zealand's exports weakened in February but growth in imports weakened even more sharply.

Looking ahead*

On Thursday in Asia/Pacific, the Singapore industrial production report is due. In Europe, the Bank of England policy announcement is due, and Gfk German consumer confidence, UK retail sales, French business climate indicator, and Eurozone M3 money supply figures are scheduled. In North America, US GDP, international trade, and jobless claims are on tap.

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