Daily market review

United States

Equities ended Tuesday with help from energy stocks and mega-caps, though sentiment was hurt late by worries about the next round of US stimulus spending. The Dow Jones industrial index rose 0.6 percent, the S&P 500 rose 0.4 percent, and the NASDAQ gained 0.4 percent.

Stocks faded late on a comment from Sen. David Perdue, R-Ga., that the negotiations over new coronavirus relief could last two more weeks. Earlier headlines had suggested active discussions though little progress toward an accord.

Modest gains in mega-caps helped keep the major indexes positive, with Apple up 0.7 percent and Amazon up 0.9 percent, as buying on fear of missing out propelled these momentum stocks.

Among sectors, energy was the leader, paced by oil supermajors as oil prices rose. Exxon Mobil was up 2.9 percent. Precious metals miners led materials stocks higher. While consumer staples gained on strength in discount stores and food & beverage. Communications services beat the market on gains in entertainment and telecoms.

Industrials outperformed as airlines had a good day, with Spirit Airlines up 7.4 percent, American Airlines up 3.5 percent, and Delta up 1.8 percent on improved TSA checkpoint numbers. Chipmakers were a bright spot in tech, with Advanced Micro Devices up 9.5 percent on an upgrade at Jefferies and Cree up 3.2 percent.

Lagging were tech stocks with Microsoft giving up some of its recent gains. Financials lagged with banks off. Health care fared worst on weakness in biotech and pharma.

In economic data, US factory orders rose 6.2 percent in June on top of a 7.7 percent jump in May that in turn followed April's 13.5 percent virus collapse. Orders for core capital goods rose 3.4 percent, which suggests business spending is recovering.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 38 cents to US$44.34, while spot gold rose US$40.10 and for the first time is over $2,000, closing at US$2,016.67. The US dollar declined against most major currencies. The US Treasury 30-year bond yield fell 5 basis points to 1.19 percent while the 10-year note yield fell 5 basis point to 0.50 percent.


Mixed earnings reports left equities flat to weaker Tuesday as concerns simmered about an uptick in coronavirus cases in Europe. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX declined 0.4 percent, the French CAC gained 0.3 percent, and the UK FTSE-100 rose 0.1 percent.

Autos, energy, and banks outperformed, while health care, food & beverage, and chemicals lagged. Energy stocks got a lift from rising oil prices while autos benefited from a positive reading on the outlook for auto sales from Ifo, the German research institute. Italian banks got a boost from data Monday showing heavy ECB purchases of Italian government debt under its Pandemic Emergency Purchase program.

Diageo was a notable loser, down 4.9 percent after a revenues miss across its global businesses, and lack of guidance due to virus uncertainty. German chemicals company Bayer fell 2.8 percent on a bigger-than-expected loss due to its settlement of lawsuits over its Roundup weedkiller.

On the plus side, BP shares rose 3.4 percent as the market liked the UK oil supermajor's plan to invest in renewable energy. Natixis, the French bank, rose 7.9 percent after announcing a change in CEO and winning analyst upgrades. Intesa Sanapaolo, the Italian bank, rose 5 percent after announcing it would boost its payout to shareholders.

Asia Pacific

Major Asian markets closed higher Tuesday, with regional investor sentiment supported by gains on Wall Street Monday. Japan's Nikkei and Topix indices were among the stronger performers, up 1.7 percent and 2.1 percent respectively, with shares of major exporters benefitting from a partial reversal of recent yen strength and automaker Suzuki Motor up sharply on better-than-expected earnings.

Australia's All Ordinaries index posted a solid gain of 1.9 percent after officials reiterated their commitment to keep monetary policy highly accommodative. Hong Kong's Hang Seng index rose 2.0 percent on the day after three consecutive daily declines, while the Shanghai Composite index underperformed with a modest 0.1 percent increase.

The Reserve Bank of Australia left its main policy rate unchanged at a record low of 0.25 percent at its policy meeting Tuesday, in line with the consensus forecast. Officials again noted that the Australian economy is going though "a very difficult period" as it recovers from the initial impact of the pandemic and that the outlook remains highly uncertain. Officials also underscored the recent surge in Covid-19 cases and subsequent tightening of restrictions in Victoria, Australia's second most populous state and location of almost 25 percent of national economic activity.

Retail sales in Australia increased for the second consecutive month in June but at a much slower pace in May when sales surged. Sales rose 2.7 percent in June after increasing 16.9 percent previously, broadly in line with preliminary estimates, with year-on-year growth picking up from 5.5 percent to 8.6 percent. With restrictions having been tightened again in recent weeks, however, the near-term outlook for sales has weakened.

Australia's trade surplus widened from A$7.341 billion in May to A$8.202 billion in June. Exports rose 3.5 percent on the month after a decline of 6.7 percent in May, suggesting that the impact of the Covid-19 pandemic moderated as restrictions on businesses were loosened over the month and conditions improved in China and some other major trading partners. Imports rose 1.3 percent on the month in June after also declining 6.7 percent in May.

Looking ahead*

On Wednesday in Asia/Pacific, New Zealand Labour Market Conditions, Hong Kong PMI, Japan PMI composite, Singapore PMI, China General Services PMI, and Indian PMI services figures will be released. In Europe, French PMI composite, German PMI composite, Eurozone PMI composite, UK CIPS/PMI services index, and Eurozone retail sales reports are on tap. In North America, ADP employment, US international trade, Canada merchandise trade, US PMI services, and ISM non-manufacturing reports are due for release, plus the US Treasury refunding announcement is on tap.

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