Daily market review

United States

Strength in technology and consumer discretionary shares helped US equity indexes edge up Wednesday, and markets tacked on more gains late in the day after some surprisingly positive comments from St. Louis Fed President James Bullard. The Dow Jones industrial index rose 0.7 percent, the S&P 500 rose 0.8 percent, and the NASDAQ gained 1.4 percent.

Bullard told CNBC most laid-off employees will return to their jobs within 90 days, that businesses are adapting to the world of Covid-19, masks will become commonplace throughout the economy, and deaths will fall sharply. The comments from Bullard, who is not now a voting member of the Federal Open Market Committee, contrast with much more cautious views expressed by other Fed officials.

Among other sectors, financials outperformed, led by asset managers. Lagging were communications services, consumer staples, health care, materials, and industrials. Trading was cautious ahead of the start of quarterly earnings season next week.

Apple, up 2.3 percent, and Microsoft, up 2.2 percent, were among the day's best performers. Levi Strauss, the iconic apparel company, fell 8.3 percent after a big earnings miss and pulling its guidance. Biotech Biogen rose 4.4 percent after the company filed for FDA approval of its treatment for dementia.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil was up 43 cents to US$43.23, while spot gold rose US$12.22 to US$1,809.21. The US dollar fell sharply against most major currencies. The US Treasury 30-year bond yield rose 2 basis points to 1.39 percent while the 10-year note yield rose 1 basis point to 0.66 percent.


Rising Covid-19 infections in the US and elsewhere hurt equities Wednesday, and banks were hit by the latest twist in the US-China dispute. The Europe-wide STOXX 600 eased 0.7 percent, the German DAX fell 1.0 percent, the French CAC lost 1.2 percent, and the UK FTSE-100 was off 0.6 percent.

Two UK banks with ties to Hong Kong, HSBC, down 2.9 percent, and Standard Chartered, down 1.5 percent, were hurt by a Bloomberg report the Trump administration is weighing a plan to undermine Hong Kong's dollar peg.

UK markets reacted somewhat favorably to UK government measures to bolster the economy, including discount vouchers for restaurants, tax cuts for housing sales and hospitality, and subsidies for employers to retain staff. In other macro news, ECB President Christine Lagarde appeared to signal no change in policy at the bank's policy council meeting next week. She told the Financial Times the ECB's existing measures are working and the bank can wait to assess incoming economic data.

Among sectors, worst off were autos & parts, banks, construction & materials, travel & leisure, media, retail, and industrials. Holding up better were utilities, basic resources, food & beverage, and real estate.

Among companies, Boohoo Group, the UK discount clothing retailer, fell 14 percent amid revelations of exploitive labor practices by its suppliers. Nokia, the telecom, fell 8.0 percent on a downgrade at JP Morgan.

Asia Pacific

Major Asian markets again posted mixed results Wednesday, with a bare regional data calendar keeping the focus on Covid-19 developments in some markets and investor sentiment in China still supported by indications that officials are supportive of additional stock market gains.

The Shanghai Composite index gained a further 1.7 percent Tuesday, while Hong Kong's Hang Seng index closed up 0.6 percent. Australia's All Ordinaries index, however, fell 1.5 percent, with concerns increasing that a recent spike in Covid-19 cases in parts of the country could derail any recovery from the initial impact of the pandemic.

Japan's Nikkei and Topix indices also fell, down 0.8 percent and 0.9 percent on the day, with shares for some technology component manufacturers impacted by reports that Apple will use a different type of screen panel in the production of its next generation mobile phone.

Looking ahead*

On Thursday in Asia, Japanese machine orders, Chinese CPI, and Chinese PPI reports are on tap. In Europe, the German merchandise trade report is scheduled. In North America, Canadian housing starts, US jobless claims, and US wholesale trade figures are scheduled.

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