Daily market review

United States

Equities edged up but the market traded tentatively as worries over rising US virus cases continued, and the market braced for earnings from Microsoft and Tesla after the US cash close. The Dow Jones industrial index and S&P 500 both rose 0.6 percent, and the NASDAQ gained 0.2 percent.

Energy stocks lagged as oil prices retreated on an unexpected rise in weekly US oil inventories. Apache, the petroleum driller, fell 2.6 percent.

Pfizer rose 5.1 percent, and its Covid-19 vaccine partner, Germany's BioNtech gained 14 percent after the companies said the US will buy 100 million doses of their vaccine if it proves safe and effective. McDonald's rose 2.9 percent as the market liked its report of improving sales trends in the US.

Among other companies in the news, United Airlines dropped 4.2 percent after an earnings miss and a gloomy outlook in light of the pandemic. Texas Instruments declined 2.2 percent after the market reacted badly to its quarterly results.

In US economic news, the housing market sizzled in June, posting a record 20.7 percent monthly jump in sales of existing homes. But at an annual rate of 4.720 million, Econoday's consensus was expecting even more at 4.800 million.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined five cents to US$44.23, while spot gold rose US$29.72 to US$1,870.04. The US dollar eased against most major currencies. The US Treasury 30-year bond yield declined 2 basis points to 1.29 percent while the 10-year note yield declined 1 basis point to 0.59 percent.


US-China tensions and more bad news on US Covid-19 cases hurt equities Wednesday as better sentiment faded following Tuesday's EU stimulus package. The Europe-wide STOXX 600 fell 0.9 percent, the German DAX fell 0.5 percent, the French CAC declined 1.3 percent, and the UK FTSE-100 fell 1.0 percent.

Markets were undercut by the latest sharp rise in US virus cases and deaths, and President Trump's admission late Tuesday that the pandemic was worsening. On the US-China front, sentiment was hurt by news that the US had abruptly told China to shut its Houston consulate, and that China in turn would force the US to shut its Wuhan consulate. UK shares suffered from gloomy headlines on prospects for a UK-EU trade deal as Brexit nears.

Among sectors, energy shares lagged the most on falling oil prices. UK supermajor BP was off 3.8 percent and Royal Dutch Shell down 3.6 percent. Stocks with heavy exposure to China were hit, including LVMH, the French luxury goods conglomerate, down 1.5 percent. Pharma shares retreated after recent steep gains, with AstraZeneca, the UK vaccine leader, off 2.7 percent.

Among companies in the news, Kingfisher, the UK retailer of do-it-yourself products, rallied 15 percent on strong quarterly results and better guidance. On the downside, French auto-parts maker Valeo declined 5.9 percent on an earnings miss.

Asia Pacific

Major Asian markets posted mixed results Wednesday with Covid-19 developments again the major focus for investors. Hong Kong's Hang Seng index was the weakest performer, closing down 2.3 percent after authorities announced tighter public health restrictions in response to a new record daily increase in Covid-19 cases.

Australia's All Ordinaries index also fell, down 1.2 percent as another large increase in infections fueled speculation that restrictions will be tightened further. Japan's Nikkei and Topix indices both closed down 0.6 percent ahead of a four-day weekend that ironically was to have coincided with the Tokyo Olympic games; authorities are advising the general public to minimize travel. The Shanghai Composite index outperformed with a modest 0.4 percent increase.

Japanese PMI's for July showed only limited easing in what is still deep contraction, with the composite well below breakeven 50 at 43.9 versus 40.8 in June. Manufacturing came in at 42.6 versus June's 40.1 with the services index at 45.2 versus 45.0. Respondents to both surveys reported continued weakness in output, new orders, employment, business sentiment, and price pressures.

Looking ahead*

On Thursday in Asia/Pacific, Singapore's CPI is due. In Europe, German Gfk consumer climate, French business climate, UK CBI industrial trends, and Eurozone consumer confidence figures are scheduled. In North America, US jobless claims, US leading indicators, and Kansas City Fed manufacturing reports are on tap.

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