Daily market review

United States

Equities gave up recent gains Wednesday as the market focus returned to the near-term reality of a dramatic downturn in the global economy, and the growing damage to companies. The Dow industrials fell 1.9 percent and the S&P 500 declined 2.2 percent. The NASDAQ was off 1.4 percent.

Markets focused on gloomy earnings from big banks, with huge provisions for credit losses, and on the renewed selloff in oil prices on huge inventory builds and projected weak demand. A new batch of US economic data showing the virus impact added to the negative picture.

All sectors declined, with oil exploration & production, autos, homebuilders, travel & leisure, miners, banks, and media the hardest hit. Consumer staples, especially food, managed care, software, and health and personal care fared best.

In company news, Citigroup fell 5.6 percent and BankAmerica dropped 6.4 percent as they raised provisions for credit losses in the face of coronavirus losses. On the positive side, Dow component United Health advanced 4.1 percent on earnings and revenues beats, and a relatively upbeat report on the virus effect. Dow member Procter & Gamble rose 0.2 percent after raising its dividend.

In economic news, US retail sales fell a monthly 8.7 percent in March. Vehicle sales plunged 25.6 percent, gasoline sales plunged 17.2 percent, and restaurant sales fell 26.5 percent. Yet the control group, which focuses on essential spending, bounced a very strong 1.9 percent in the month reflecting consumer stockpiling. Separately, industrial production fell sharply in March and near the extreme of Econoday's consensus ranges: at minus 5.4 percent overall, and minus 6.3 percent for the manufacturing component. Total capacity utilization fell 4.3 percentage points to 72.7 percent.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell by US$1.94 to US$28.14, while gold fell US$23.70 to US$1,745.20. The US dollar rose sharply against most major currencies. The US Treasury 30-year bond yield fell 13 basis points 1.27 percent while the 10-year note yield fell 12 basis points to 0.64 percent.


Coronavirus fear reasserted itself Wednesday as markets reckoned with bleak corporate results. The Europe-wide STOXX 600 fell 3.3 percent, the German DAX dropped 3.9 percent, the French CAC declined 3.8 percent, and the UK FTSE-100 was off 3.3 percent.

Rising coronavirus cases in France and the UK caught the market's attention, along with unprecedented US economic data pointing to the impact of the pandemic. Equities losses were across the board, with defensive plays holding up best, and cyclical companies that have risen lately falling back the most.

Among sectors, energy companies led the decline as crude oil prices were hit by International Energy Agency forecasts showing plunging demand and a glut of supply. Bank stocks and financials suffered from rising credit worries following news of huge increases in credit provisioning from JP Morgan and other big US banks. Autos and basic resources also underperformed amid worries over plunging global demand. Outperformers included food & beverage, health care, retail, personal & household, and utilities.

Among companies in focus, Royal Dutch Shell was off 7.4 percent, and BP fell 6.7 percent. Wizz Air, the Swiss airline, was off 8.2 percent on worries over traffic. Jupiter Fund Management dropped 8.6 percent on news of a drop in assets under management. ASML Holding, the Dutch chip equipment maker, was off 3.4 percent on an earnings miss.

Asia Pacific

Most major Asian markets closed moderately lower Wednesday, with a light regional data calendar and relatively limited coronavirus news during the Asian trading session providing little guidance to investor sentiment. Hong Kong's Hang Seng index fell 1.2 percent, the Shanghai Composite index dropped 0.6 percent, and Australia's All Ordinaries index closed down 0.4 percent. Japan's Nikkei fell 0.5 percent while the Topix was flat. Markets were closed in Korea for parliamentary elections.

India's wholesale price index increased by 1.00 percent on the year in March, down from 2.26 percent in February, with this slowdown mainly driven by weaker food and fuel prices. CPI data published earlier in the week also showed a drop in headline consumer inflation, from 6.58 percent in February to 5.91 percent in March.

Looking ahead*

On Thursday in Asia/Pacific, Chinese house price index and Australian labor force data are due. In Europe, German CPI, Swiss producer and import prices, and Eurozone industrial production reports are scheduled. In the US, housing starts, jobless claims, and Philly Fed manufacturing data are on tap. From Canada, the manufacturing sales report is due.

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