Daily market review

United States

Optimism about a fast recovery from the pandemic faded Thursday amid concerns that the US remains ill-equipped to reopen the economy soon, but sectors like online retail and home entertainment remained buoyant, and major indexes recovered from early declines. It helped that US data releases were not as bad as widely feared. The Dow industrials rose 0.1 percent, the S&P 500 rose 0.6 percent, and the NASDAQ was up 1.7 percent.

The market remains focused on worries that infection rates remain high, with new locations surging, while testing and tracing capacity remains inadequate. New York and other East Coast states extended shutdowns of nonessential activity until May 15.

Among sectors, airlines, consumer finance, energy, banks, and industrials were among the weakest performers while companies that appear to do well in the COVID-19 economy – internet, multi-line retail, and entertainment, plus managed care – outperformed. Winners included Amazon, up 4.4 percent, Walmart, up 2.8 percent, and Netflix, up 2.9 percent. Losers included United Airlines, down 12 percent, and Apache, the oil production company, off 5.7 percent.

Among companies reporting, Morgan Stanley weakened 0.1 percent after an earnings miss and citing a string of negative impacts on each aspect of its business, along with falling asset prices. On the positive side, Bed, Bath & Beyond rallied 18 percent after it said the drop in same-store sales was not as bad as anticipated. Costco, the big-box chain, rose 4 percent after boosting its dividend. Abbott Laboratories rose 5.5 percent after beating expectations and launching a new series of fast tests for COVID-19.

In US economic news, initial jobless claims remained elevated in the latest week but fell a sizable 1.370 million to a 5.245 million level that was under Econoday's consensus for 6.0 million. Separately, the Philadelphia Fed report for April points to massive stoppages in the manufacturing sector. The index, which was at minus 12.7 and already well into the negative column in March, fell far more deeply to minus 56.6. Also released, building permits held up in March but not housing starts. Permits did slow from 1.452 million annual rate in February but the 1.353 million rate in March was better than expected. Yet starts fell to a 1.216 million annual rate, well below the consensus and March's revised 1.564 million.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell by 8 cents to US$28.06, while spot gold fell US$3.26 to US$1,719.49. The US dollar rose against most major currencies. The US Treasury 30-year bond yield fell 6 basis points 1.21 percent while the 10-year note yield fell 2 basis points to 0.61 percent.


Signs that European countries are set to ease lockdown restrictions helped most major indexes firm Thursday, as Germany became the latest to begin easing limits, following Austria and Denmark. Reports suggested infection rates were peaking in hard-hit Spain and Italy. The Europe-wide STOXX 600 rose 0.6 percent, the German DAX rose 0.2 percent, the French CAC eased 0.1 percent, and the UK FTSE-100 was up 0.6 percent.

Among sectors, leaders included technology, health care, travel and leisure while lagging were energy, banks and insurance.

Among companies in focus, Volkswagen edged up 0.3 percent after saying its factories in Germany would restart later this month, though its earnings missed expectations and the company pulled its guidance. CHR Hansen, a Danish biotech, rose 10 percent after an earnings beat. HelloFresh, the German meal kit company, rose 9 percent as it said sales continued to soar. On the downside, M&G, a UK investment manager, dropped 12 percent as earnings missed. Aeroport de Paris fell 5 percent after reporting a plunge in air traffic. Easyjet fell 2.5 percent after guiding earnings lower.

In economic data, Eurozone goods production matched expectations in February. Following a 2.3 percent monthly surge at the start of the year, output (ex-construction) fell just 0.1 percent. This put annual workday adjusted growth at minus 1.9 percent, down from a smaller revised 1.7 percent decline last time.

Asia Pacific

Most Asian markets closed mostly lower Thursday, following the lead set on Wall Street Wednesday. Japan's Nikkei and Topix indices fell 1.3 percent and 0.8 percent respectively, while Hong Kong's Hang Seng index closed down 0.6 percent. The Shanghai Composite index bucked the trend with a modest 0.3 percent increase, while Australia's All Ordinaries index fell 1.0 percent.

In data that mostly preceded virus effects, Australia's labor market saw an increase of 5,900 in March, down from a revised increase of 25,600 in February but much stronger than the consensus forecast for a fall of 45,000. The unemployment rate rose from 5.1 percent in February to 5.2 percent in March, again better than the consensus forecast for an increase to 5.5 percent, while the participation rate was unchanged at 66.0 percent.

Looking ahead*

On Friday in Asia/Pacific, Chinese GDP, Chinese industrial production, Chinese retail sales and Chinese fixed asset investment are due as is Singapore merchandise trade. In Europe, the Eurozone HICP report is scheduled. In the US, the leading indicators report is on tap.

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