Daily market review

United States

Surging oil prices supported stocks Thursday but major indexes ended at the day's lows after a mixed bag of US corporate results and disappointing COVID-19 drug news. The Dow industrials gained 0.2 percent, the S&P 500 was off 0.1 percent, and the NASDAQ was flat.

Energy stocks outperformed as oil continued to recover. Other winners included internet stocks, railroads, managed care, autos, and media. Laggards included real estate, utilities, asset managers, discount retailers, and grocery stores.

Markets took a knock from news that a clinical trial of Gilead Laboratories' vaunted drug remdesivir had shown no benefit to COVID-19 patients. The drug is undergoing ongoing trials elsewhere; it was positive news from other observations that gave markets a big boost last week.

Among companies reporting results, railroads CSX, up 1.0 percent, and Union Pacific, up 3.6 percent, gained after announcing better operating ratios, despite weaker revenues. Big pharma Eli Lilly rose 2.2 percent after an earnings and revenues beat, and affirming its guidance. Target, the discount retailer, fell 2.8 percent after warning its profits would continue to suffer as consumers switch to cheaper goods, and shop more online.

In US economic data, new home sales fell sharply but didn't collapse in March, likely reflecting the partial degree of that month's lock downs. New home sales fell to a 627,000 annual rate, just below Econoday's consensus for 643,000. Meanwhile, jobless claims fell 810,000 in the April 18 week to a still elevated 4.427 million.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by US$1.01 to US$21.58, while spot gold rose US$13.76 to US$1,731.40. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield fell 5 basis points 1.18 percent while the 10-year note yield fell 3 basis points to 0.60 percent.


Rising oil prices bolstered energy stocks and an upbeat report from Credit Suisse gave bank stocks a lift to boost equities Thursday, but weak economic reports limited the gains. The Europe-wide STOXX 600 rose 0.9 percent, the German DAX gained 1.0 percent, the French CAC gained 0.9 percent, and the UK FTSE-100 was up 1.0 percent.

Royal Dutch Shell rose 3.7 percent and BP gained 2.2 percent to pace gains in the energy sector as crude oil prices rebounded for a second day. As the earnings season for European banks begins, Credit Suisse rose 2.3 percent after topping earnings expectations.

Among other sectors, leaders included basic resources, autos, industrials, travel, chemicals, while lagging were retail, real estate, food & beverage, media, construction, and utilities.

In economic data, the German GfK survey confirmed another big hit to consumer sentiment in April and sees much worse to come next month. Having already slumped to a downwardly revised 2.3 at the start of the quarter, the report's forecast for the overall climate indicator in May is minus 23.4. Separately, German PMI flash data for April saw a more than 10-point decline in manufacturing to 34.4 and a nearly 20-point drop in services to a deep low of 15.9.

Asia Pacific

Most Asian markets closed higher or were little changed Thursday, with gains on Wall Street Wednesday and a rebound in global oil prices providing some boost to regional investor sentiment. Japan's Nikkei and Topix indices were among the stronger performers in the region, advancing 1.5 percent and 1.4 percent respectively despite the release of weak PMI survey data. Hong Kong's Hang Seng index closed up 0.4 percent, Australia's All Ordinaries index was unchanged on the day, and the Shanghai Composite index fell 0.2 percent.

Japanese flash PMI data for April, among the first indicators to provide information on the ongoing impact of the pandemic, fell to 37.8, down from 41.1 in March and weaker than the consensus forecast of 42.0. The equivalent flash for the service sector was 22.8, weakening further from the final estimate of 33.8 for March. Respondents to both surveys reported very sharp declines in output, new orders, new export orders, and employment, weak business confidence and subdued price pressures.

Preliminary merchandise trade data for Australia for March were published Thursday as part of a new range of data products introduced to provide more timely and frequent information about the impact of the global coronavirus pandemic. The preliminary estimates show Australia's exports rose 29 percent on the month in March, rebounding strongly from a decline of 4.7 percent in February. This rebound was largely driven by mining and energy exports, including a significant increase in iron ore exports to China after these had declined in January and February. Imports also strengthened, up around 10 percent on the month after falling 4.3 percent previously, with increases in non-monetary gold, aircraft, and consumer electronics.

Hong Kong's headline consumer price index increased 2.3 percent on the year in March, above the 1.8 percent average for January and February. Officials advise referring to the average for January and February in order to remove distortions caused by the timing of lunar new year holidays. Hong Kong's underlying inflation rate, however, fell from an average of 3.1 percent for January and February to 2.6 percent in March, in part reflecting weaker food price inflation. Officials expect inflation to remain moderate in coming months given weakness in domestic and external activity and recent currency appreciation.

Looking ahead*

On Friday in Asia/Pacific, Japanese CPI and Singapore industrial production figures are scheduled. In Europe, UK retail sales, German Ifo, and Italian business and consumer confidence reports are scheduled. In North America, it's durable goods orders and the consumer sentiment reports.

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