Daily market review

United States

Equities gave up morning gains to end lower Tuesday amid gloomy forecasts for the US economy, including Goldman's new prediction that GDP could drop by more than 30 percent in the second quarter. Markets had been bolstered earlier by focus on the next tranche of US fiscal stimulus to include big infrastructure spending. The Dow industrials fell 1.8 percent, the S&P 500 lost 1.6 percent, and the NASDAQ was off 1.0 percent.

Real estate and utilities were the worst performers, along with banks, insurance, telecom, consumer staples, transportation, and retail, while outperformers were hotels, autos, media, metals, miners, and energy, as oil prices perked up after recent declines.

Among companies in focus, Apache, the exploration and production company, rose 1.7 percent after an upgrade from UBS. Dupont, the chemical company, gained 1.5 percent after a favorable court ruling in a dispute over environmental damage. Conagra, the food conglomerate, rose 3.9 percent after raising its guidance. On the downside, Restoration Hardware fell 15 percent after noting its stores have been closed due to the virus. Domino's Pizza fell 7 percent after citing the impact of event cancellations and televised sports. Zoom Video fell 3.2 percent after a warning letter from the state of New York on security concerns, even as usage has surged. McCormick, the spice company, declined 1.4 percent after pulling its guidance on virus uncertainty.

In economic news, consumer confidence fell sharply but not as sharply as expected, down 12.6 points to 120.0 in March which was actually at the very top of Econoday's consensus range. Meanwhile, March's Chicago PMI came in much better than expected, at 47.8 to indicate only moderate slowing in the month of March but at a much less severe pace than Econoday's consensus for 40.0.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 9 cents to US$22.74, while gold fell US$44.33 to US$1,577.77. The US dollar was mixed against most major currencies. The US Treasury 30-year bond yield rose 1 basis point to 1.35 percent while the 10-year note yield was down 3 basis points to 0.69 percent.


Equities rose in volatile trading Tuesday after reports of slowing in new virus cases in Italy and a comment from the World Health Organization that Europe's pandemic may be peaking. The Europe-wide STOXX 600 rose 1.7 percent, the German DAX rose 1.2 percent, the French CAC gained 0.4 percent, and the UK FTSE-100 was up 2.0 percent.

Hard-hit energy and travel & leisure stocks were among Tuesday's best performers, along with basic resources, media, construction, autos, insurance, and real estate. Laggards included telecom, banks, utilities, personal and household goods, technology, food, and retail.

On the company news front, HelloFresh, the German supermarket, rose 8.7 percent on strong first-quarter guidance. Amoeba, the French pharma, rocketed 132 percent on news of a partnership with BASF. Verona, the UK biopharma, rose 12 percent on positive results from its ensifentrine medicine.

In economic data, Eurozone inflation provisionally decelerated again, and sharply, in March. At just 0.7 percent, the flash annual rate was down 0.5 percentage points from February's final 1.2 percent, equaling its lowest level since November 2016. Separately, the German labor market remained unexpectedly firm in March. Following an 8,000 decline in February, the number of people out of work rose just 1,000 to 2.267 million. As a result, the unemployment rate was again unchanged at 5.0 percent, a tick below the market consensus.

Asia Pacific

Major Asian markets posted mixed results Tuesday, with incoming data driving some of this price action. The Shanghai Composite index closed marginally higher, up 0.1 percent, after official PMI manufacturing survey data rebounded strongly in March, while Hong Kong's Hang Seng index was among the stronger performers in the region, closing up 1.9 percent. Japan's Nikkei and Topix indices, however, fell 0.9 percent and 2.3 percent respectively after data showed weaker conditions in the labour market and the manufacturing sector. After surging Monday, Australia's All Ordinaries index gained early in the session but closed down 1.6 percent.

Chinese PMI survey data suggest that economic activity has bounced back in March after collapsing in February. China's CFLP Manufacturing PMI increased from a record low of 35.7 in February to 52.0 in March (50 indicates no change in monthly composite activity), while the non-Manufacturing PMI index increased from a record low of 29.6 to 52.3. Non-official Markit PMI surveys for the manufacturing and services sectors will be published in the next few days and will be watched closely to see if they provide supporting evidence of this improvement in conditions.

Japanese data for February published Tuesday provided evidence of the initial impact of the global coronavirus pandemic on the domestic economy. The unemployment rate was steady at 2.4 percent in February, but employment growth slowed sharply and the number of unemployed workers increased. The index of industrial production, which had already indicated weakness in the manufacturing sector before the onset of the pandemic, showed weaker growth in February, rising 0.4 percent on the month after an increase of 0.8 percent previously. In line with PMI survey data, officials forecast a sharper drop in March but then a rebound in April. Retail sales, however, strengthened in year-on-year terms from a decline of 0.4 percent to an increase of 1.7 percent in February.

Looking ahead*

On Wednesday in Asia/Pacific, Japan PMI manufacturing, China PMI Caixan manufacturing, Japan BOJ tankan, and Australia RBA meeting minutes are due. In Europe, UK Nationwide HPI, German retail sales, Swiss PMI manufacturing, French PMI manufacturing, German PMI manufacturing, Eurozone PMI manufacturing, UK PMI manufacturing, and Eurozone unemployment figures are scheduled. In US data, ADP employment, PMI manufacturing, ISM manufacturing, and construction spending reports are on tap.

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