Daily market review

United States

Risk appetite suffered Monday from the US threat to re-impose trade sanctions on China over the global pandemic. Equities losses were limited by strength in technology and pharma. The Dow industrials rose 0.1 percent, the S&P 500 rose 0.4 percent, and the NASDAQ was up 1.2 percent.

Among sectors, worst off were industrials, especially airlines, and financials, especially banks. Tech shares led, with the FAANGS seeing good gains.

Gilead Laboratories, up 0.4 percent, remained in focus after the Food & Drug granted permission for its remdesivir medicine to be used against COVID-19. On the downside, airline stocks suffered on news that investor Warren Buffett had cut his holdings. Delta Airlines fell 6.4 percent, United Airlines was off 5.1 percent, and Southwest was off 5.7 percent. Tyson Foods, the meat producer, fell 7.9 percent after reporting an earnings miss and saying it lacks visibility on its business outlook due to the pandemic.

In US economic data, factory orders in March came in even weaker than expected, cascading 10.3 percent lower versus Econoday's consensus expectations for 9.5 percent monthly contraction. The split between the report's two main components showed a 5.8 percent drop for nondurable goods -- the new data in today's report as oil prices fell sharply -- and a 14.7 percent plunge for durable goods which was 3 tenths lower than last week's advance reading.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by US$1.21 to US$27.78, while spot gold rose US$4.31 to US$1,704.33. The US dollar was mostly higher against major currencies. The US Treasury 30-year bond yield rose 4 basis points to 1.29 percent while the 10-year note yield rose 2 basis points to 0.64 percent.


Equities slipped Monday on weak economic data and renewed worries over US-China trade disputes after the US threatened tariffs to punish China for the global pandemic. The Europe-wide STOXX 600 fell 2.7 percent, the German DAX lost 3.6 percent, the French CAC dropped 4.2 percent, and the UK FTSE-100 eased 0.2 percent.

Worst-hit sectors included oil & gas, banks, autos, construction, industrials, travel & leisure, insurance, technology, and real estate, while holding up better were health care, telecom, media, retail, basic resources, utilities, and financial services. Among companies in the news, German equipment maker Thyssenkrupp dropped 11 percent after telling staff its business was hurting due to the coronavirus.

In economic data, German manufacturing activity contracted just marginally less than previously reported in April. At 34.5, the final sector PMI was 0.1 point stronger than its flash reading but still almost 11 points short of its final March outturn. It was also the weakest print since March 2009. Separately, Eurozone manufacturing activity was revised weaker still in the updated report for March. At just 33.4, the final sector PMI was 0.2 points short of its flash estimate and so even further below March's final 44.5.

Asia Pacific

Markets were closed Monday in Japan and China for holidays, with moves mixed elsewhere in the region. Hong Kong's Hang Seng index fell sharply, closing down 4.2 percent after the release of weak GDP data. Investor sentiment was impacted by signs of increased tensions between the US and China over the circumstances surrounding the origin and early stages of the coronavirus outbreak. Australia's All Ordinaries index, however, rose 1.2 percent on the day, with news over the weekend continuing to suggest that social and business restrictions may be eased.

At minus 5.3 percent, Hong Kong's first-quarter GDP contracted for the fourth consecutive quarter and at a record pace. On the year, GDP fell 8.9 percent after dropping 2.9 percent previously, also a record decline. Hong Kong's economy was already weak in 2019, reflecting the impact of global trade tensions and domestic civil unrest, but the impact of the coronavirus pandemic has significantly exacerbated the downturn. Despite delivering significant fiscal stimulus in recent months, the government currently forecasts the economy to shrink by 7.0 percent this year.

The Markit India Manufacturing PMI's headline index fell sharply from 51.8 in March to 27.4 in April, its lowest level since the survey began in 2005 and indicating that, due to lockdowns, activity in the sector has collapsed. Respondents reported an unprecedented contraction in output, new orders, new export orders, and employment, though the survey's measure of business sentiment about the twelve-month outlook picked up as respondents see at least some recovery ahead. Input costs and selling prices were reported to have fallen at the sharpest pace in the survey's history.

Looking ahead*

On Tuesday in Asia/Pacific, the Reserve Bank of Australia monetary policy announcement is scheduled. In Europe, Swiss consumer climate, Swiss CPI, UK PMI services, and Eurozone PPI reports are due. In North America, Canadian and US trade reports, US PMI services, and US ISM nonmanufacturing reports are due.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies