Daily market review

United States

New Federal Reserve measures to boost the economy and Fed Chair Jay Powell's pledge to continue acting aggressively gave stocks a boost Thursday, but major equities ended below the day's highs. The Dow industrials rose 1.2 percent, the S&P 500 gained 1.5 percent, and the NASDAQ gained 0.8 percent.

The Fed said it would make up to $2.3 trillion in new loans, including direct lending to non-financial firms. Powell said he expects a relatively fast recovery once the pandemic eases. He said the Fed would be in no rush to pull back its support, and that more fiscal measures may be required.

The Fed announcement overshadowed news of another whopping rise in initial jobless claims in the latest week, as claims surged 6.606 million in the April 4 week following an upwardly revised 6.867 million in the March 28 week.

Best performers included banks, autos, homebuilders, airlines, insurers, and utilities, while lagging were oil & gas, managed care, chipmakers, railroads, and biotech. Energy stocks gave up early gains to end lower as oil prices retreated amid skepticism that oil exporters would succeed in implementing the drastic output cuts markets anticipated earlier.

In company news, Dow component Walt Disney rose 3.5 percent after reporting a big gain in its paid-subscriber streaming service. Starbucks, the coffee chain, rose 3.2 percent despite warning that it would miss its Q1 guidance and withdrawing guidance beyond that. Costco, the big-box retailer, slipped 2.0 percent after reporting disappointing sales results.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell by US$0.85 to US$31.99, while gold rose US$51.00 to US$1,735.30. The US dollar fell against most major currencies. The US Treasury 30-year bond yield fell 3 basis points to 1.35 percent while the 10-year note yield fell 4 basis points to 0.73 percent.


New Federal Reserve stimulus and hopeful news on COVID-19 infections in Europe lifted equities Thursday. The Europe-wide STOXX 600 rose 1.6 percent, the German DAX rose 2.2 percent, the French CAC rose 1.4 percent, and the UK FTSE-100 gained 2.9 percent.

The Fed's announcement that it would implement another $2.3 trillion stimulus program boosted risk appetite, along with reports of slowing infection rates in France, Spain, and elsewhere in Europe, and plans to ease lockdowns.

Among sectors, riskier stocks, and those hit most by the recent selloff, led the gains, while more defensive plays lagged. Outperformers included travel & leisure, autos, construction, and technology, while lagging were health care, oil & gas, food & beverage, and utilities.

Among stocks, Legal & General, the UK financial services company, rose 8.7 percent after defying regulators' requirement to suspend its dividend. Scandic Hotels rose 19 percent after reporting on costs cuts and its financial outlook. Just Eat Takeaway, the Dutch food delivery company, rose 12 percent on an upbeat quarterly sales report.

Asia Pacific

Major Asian markets again diverged Thursday, with a very light regional data calendar keeping the focus on a range of other factors, including coronavirus developments and upcoming US labour market data. An increase in global oil prices ahead of negotiations between OPEC and Russia on oil production targets also guided trading during the Asian session

Australia's All Ordinaries index was among the strongest performers Thursday, closing up 3.4 percent ahead of a four-day weekend, with a report from the Reserve Bank of Australia expressing confidence that the domestic financial system is well placed to manage risks posed by the pandemic and other factors. Korea's Kospi index closed up 1.6 percent after the Bank of Korea left policy rates on hold. Hong Kong's Hang Seng index and the Shanghai Composite index advanced 1.4 percent and 0.4 percent respectively, while Japan's Nikkei and Topix indices underperformed, closing flat and down 0.6 percent respectively.

India's industrial production index rose 4.5 percent on the year in February, the strongest showing since July last year and picking up from growth of 2.0 percent in January. In contrast, PMI survey data indicated that conditions weakened in the Indian manufacturing sector in February and slowed further in March, partly reflecting the impact of the global coronavirus impact on the Indian economy. Concerns about this impact also prompted the Reserve Bank of India to hold an unscheduled meeting late March and cut its main policy rate by 75 basis points from 5.15 percent to 4.4 percent, its lowest level since 2010. RBI officials warned that conditions could deteriorate further and promised to do "whatever is necessary to shield the domestic economy from the pandemic".

Looking ahead*

On Friday in Asia/Pacific, the following are due: Japanese PPI, Chinese CPI, and Chinese PPI. In Europe, the French industrial production report is due. In the US, CPI figures are on tap.

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