Daily market review

United States

Earnings disappointment hurt equities Friday, along with worries over President Trump's threats to target China with new trade sanctions. The Dow industrials fell 2.5 percent, the S&P 500 was off 2.8 percent, and the NASDAQ fell 3.2 percent.

Apple sold off 1.6 percent despite strong results amid disappointment that it did not provide second-quarter guidance due to virus uncertainty. Amazon, off 7.6 percent, beat on revenues but the market reacted badly to the company's decision to spend its entire $4 billion first quarter profit on coping with the pandemic.

Among sectors, worst hit were energy, autos, retail, banks, airlines and telecom. Holding up better were food, precious metals, pharma, and steel.

In US economic data, reflecting a giant 76.0 score for deliveries -- delays tied to virus shutdowns -- ISM's composite manufacturing headline came in at 41.5, above expected. In contrast, new orders came in at 27.1 with production and employment both at 27.5, all 15 to 20 points lower than March. Backlogs fell more than 8 points to 37.8 with input prices down a couple more points to 35.3.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by US$1.30 to US$26.57, while spot gold rose US$12.21 to US$1,700.02. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield fell 2 basis points 1.26 percent while the 10-year note yield fell 2 basis points to 0.62 percent.


Equities slipped Friday on weakness in energy, mining and travel stocks, with sentiment hurt by President Trump's threat to renew trade sanctions against China. The Europe-wide STOXX 600 fell 0.8 percent and the UK FTSE-100 declined 2.3 percent. Other major markets were on holiday.

Royal Dutch Shell dropped 7 percent for a second day of steep declines, after a ratings downgrade Friday. BP also fell 4.6 percent. British Airways fell 3 percent after announcing cutbacks amid continued fallout from the pandemic.

Outperformers included construction, autos, chemicals and technology, while lagging were basic resources, travel, insurance, and consumer goods.

Asia Pacific

Most major Asian markets were closed for holidays Friday, including those in China, Hong Kong, Korea, Singapore, and India. Those markets open for trading fell sharply, with Australia's All Ordinaries index closing down 4.9 percent, reversing most of the strong gains made earlier in the week, and Japan's Nikkei and Topix indices dropping 2.8 percent and 2.2 percent on the day after weak PMI data. Major markets closed higher on the week to varying degrees, with Hong Kong's Hang Seng index up 3.4 percent, the Shanghai Composite index up 1.8 percent, Japan's Nikkei and Topix indices up 1.9 percent and 0.7 percent respectively, and Australia's All Ordinaries index up 0.5 percent.

The Markit Manufacturing PMI headline index for Japan fell to 41.9 in April, below the flash estimate of 43.7, confirming a decline from 44.8 in March, and indicating that Japan's manufacturing sector contracted at the steepest place since March 2009. Although the Japanese manufacturing sector was already experiencing an extended period of weakness heading into 2020, it is clear that the economic impact of the global coronavirus pandemic has exacerbated and will likely prolong the downturn. The minutes of the Bank of Japan's March 16 meeting, also published Friday, showed that some officials expressed concern that Japan's economy may not recover strongly even after the direct impact of the pandemic recedes given that it was weak even before the impact hit.

Australia's producer price index increased by 0.2 percent on the quarter in the three months to March after increasing 0.3 percent in the three months to December. Year-on-year growth in the producer price index eased from 1.4 percent to 1.3 percent.

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