Daily market review

United States

The reopening story dominated markets Wednesday, with value stocks and cyclicals continuing to outperform growth stocks. The Dow industrial index rose 2.2 percent; the S&P 500 gained 1.5 percent, and the NASDAQ was up 0.8 percent.

Markets noted reports that New York City could begin a phased reopening in June, that California will allow barber shops and hair salons to reopen, and that Disney World in Florida is to reopen on a limited basis in July. On the pandemic front, top health adviser Anthony Fauci said a second wave of infections may not happen and is not inevitable, and reports noted lack of a feared uptick in cases in states like Georgia where reopenings occurred a month ago.

Among stock sectors, financials, retail, and industrials led the winners, with laggards including technology, health care, and communications services.

Among companies in focus, American Airlines rose 7.5 percent after the company reported improving demand and said it is not preparing to file for bankruptcy. SeaWorld Entertainment rose 7 percent after saying it will reopen its facility in Florida in June. Papa John's Pizza rose 6.2 percent after reporting strong May business and saying its stores are all open. On the downside, Moderna, the biotech that had rallied on reports of progress on its Covid-19 vaccine, fell 9.6 percent on reports of insider selling of shares.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.30 to US$34.87, while spot gold rose US$1.18 to US$1,713.78. The US dollar rose against most major currencies. The US Treasury 30-year bond yield was unchanged at 1.44 percent while the 10-year note yield fell 1 basis point to 0.68 percent.


Optimism over reopening and the latest government bailout plans gave equities a boost Wednesday. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX gained 1.3 percent, the French CAC rose 1.8 percent, and the UK FTSE-100 was up 1.3 percent.

Markets reacted favorably after European Commission President Ursula von der Leyen spelled out a E1.85 trillion aid package, to be financed largely with EU bonds. Markets also looked favorably on news of a new UK testing and tracing initiative to fight the pandemic. Meanwhile, ECB President Christine Lagarde said the Eurozone was likely to contract by 8 to 10 percent in 2020, a somewhat smaller contraction than ECB officials had previously predicted.

Among sectors, leaders included autos & parts, banks, insurance, oil & gas, travel & leisure, telecom, utilities, basic resources, and media. Lagging were health care, technology, financial services, and industrials.

Among auto companies in the news, Fiat Chrysler rose 3 percent after acquiring state-backed bank funding. Peugeot and Citroen both rose 4.9 percent on more French government support for the ailing automakers.

Asia Pacific

Major Asian markets posted mixed results Wednesday, with a very light regional data calendar keeping investor focus on the potential that plans to tighten security rules in Hong Kong could impact US-China relations. China's National People's Congress is expected to approve the draft legislation later in the week despite protests from US officials and legislators.

Hong Kong's Hang Seng index fell 0.4 percent on the day, while the Shanghai Composite index fell 0.3 percent. Australia's All Ordinaries index was little changed on the day, down 0.1 percent. Japan's Nikkei and Topix indices outperformed with increases of 0.7 percent and 1.0 percent respectively.

Chinese industrial profits dropped 27.4 percent year-to-date in April, after falling 36.7 percent in March, providing evidence of the ongoing impact of the pandemic on the nation's manufacturing sector. Profits fell 4.3 percent in year-on-year terms in April, improving from a decline of 34.9 percent in March.

Looking ahead*

On Thursday in Asia/Pacific, the Australian new capital spending report is due. In Europe, Italian business and consumer confidence, Eurozone EC economic sentiment, and German CPI reports are scheduled. In North America, US durable goods, US GDP, US jobless claims, and US pending home sales reports are due.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies