Daily market review

United States

Favorable results in an early-stage vaccine trial supported stocks, along with better-than-expected economic data, but the gains faded into the close as Covid-19 worries weighed. The Dow Jones industrial index eased 0.3 percent, the S&P 500 rose 0.5 percent, and the NASDAQ gained 1.0 percent.

Pfizer led advancers with a gain of 3.2 percent after it said a Covid-19 vaccine it is developing with German biotech BioNTech had caused humans testers to develop antibodies and had been tolerated mostly well. Despite the vaccine news, risk assets suffered late on word that Apple would close more US stores and California would introduce new limits.

In US economic data, robust expansion in new orders and production led a much better-than-expected ISM manufacturing report for June. The composite index at 52.6 was up nearly 10 points from May with new orders well above 50 at 56.4 and production at 57.3. Separately, ADP estimated private payrolls will rise 2.369 million in Thursday's employment report for June, slightly better than expected. Some forecasters revised up their prediction for the employment report, but expectations still center on a gain of 3 million nonfarm jobs.

Among companies, Fedex jumped 12 percent after reporting revenues and earnings that got a lift from e-commerce orders and were well ahead of expectations. United Airlines ended down 0.5 percent after giving up morning gains spurred by news it would triple its July flights.

Apple slipped 0.2 percent after it closed more US stores due to the pandemic. Facebook rose 4.6 percent even as more advertisers joined a boycott on social media to press for limits on hate speech. Boeing fell 1.5 percent on a report that it failed to inform regulators about design changes for the troubled 737 Max aircraft.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 96 cents to US$42.01, while spot gold fell US$9.45 to US$1,772.08. The US dollar declined against most major currencies. The US Treasury 30-year bond yield rose 2 basis points 1.43 percent while the 10-year note yield rose 2 basis point to 0.67 percent.


Equities recovered from early losses on hopeful vaccine news and better economic data to end flat to slightly weaker Wednesday. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX fell 0.4 percent, the French CAC eased 0.2 percent, and the UK FTSE-100 also declined 0.2 percent.

Markets came off the day's lows on news of good results in early-stage human trials of a Covid-19 vaccine developed by Pfizer and German biotech BioNtech, which rose 5 percent. Stronger-than-expected US purchasing managers and ADP payrolls data helped sentiment. Earlier, equities were hurt by negative headlines in EU-UK Brexit talks and worries about delayed EU fiscal stimulus plans.

Among sectors, outperformers included travel & leisure, oil & gas, health care, real estate, personal & household goods, and industrials. Lagging were autos, basic resources, banks, telecom, financial services, and media.

Among companies, Airbus rose 1.1 after announcing huge layoffs and plunging orders. Suez, the French utility, fell 1.3 percent after warning on declining revenues. Sainsbury, the UK retailer, fell 2.5 percent after issuing weaker profits guidance.

Asia Pacific

Major Asian markets posted mixed results Wednesday, with incoming data suggesting that the economic impact of the Covid-19 pandemic remains severe in Japan but has moderated in China. Japan's Nikkei closed down 0.8 percent and the Topix lost 1.3 percent, with domestic investor sentiment also hurt by a senior government official suggesting that a state of emergency could be re-introduced in response to a recent increase in Covid-19 cases. In contrast, the Shanghai Composite index and Australia's All Ordinaries index advanced 1.4 percent and 0.7 percent respectively.

Markets in Hong Kong were closed for a holiday, with local police announcing the first arrests for violations of the national security law that came into force Tuesday at the direction of the Chinese government. This law imposes tighter restrictions and additional powers to prevent activities considered to be subversive or promoting secession. Details announced by Chinese authorities confirmed that the laws will also apply to companies and non-permanent residents of Hong Kong.

In Japan, the second-quarter Tankan report showed business sentiment deteriorated sharply in both the manufacturing and non-manufacturing sectors though firms, in a hint of post-virus hopes, expect capital expenditures to rebound in the fiscal year ending March 2021. Japan's manufacturing PMI ended June solidly improved at 40.1 but still in sub-50 contraction. A plus in the report, like in the Tankan, are improved expectations for conditions ahead.

Looking ahead*

On Thursday in Asia/Pacific, the Australian merchandise trade report is due. In Europe, the following data releases are on tap: Swiss CPI, Eurozone PPI, and Eurozone unemployment. In North America, US employment, US international trade, US jobless claims, US factory orders, US motor vehicle sales as well as Canadian merchandise trade will be posted.

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