Daily market review

United States

Strength in mega-caps buoyed the major indexes while much of the rest of the market sagged Thursday. The Dow Jones industrial index rose 0.7 percent, the S&P 500 gained 0.6 percent, and the NASDAQ rose 1.0 percent.

Apple, up 3.5 percent, Amazon, up 0.6 percent, Facebook, up 6.5 percent, Microsoft, up 1.6 percent, and Alphabet, up 1.8 percent, remained investor favorites despite worries over the US economic outlook, and doubts over the US coronavirus relief package where talks continue and the two sides appear far apart.

A decline in US jobless claims provided some support, but activity appeared cautious ahead of the monthly US employment report due Friday. Concern about a downbeat report increased after a surprisingly weak reading on private payrolls from ADP Wednesday.

Among sectors, communications services and techs outperformed, reflecting the mega-caps. Transports managed to rise, with Kansas City Southern, the railway, up 5 percent on speculation it may be acquired. Energy, financials, and health care lagged.

Among companies reporting, Metlife declined 3.5 percent after an earnings and revenues miss. On the positive side, Costco rose 1 percent after its same-store sales topped expectations. Bristol Myers Squibb rose 2.8 percent after raising its earnings and revenues guidance and on a favorable court ruling in a patent dispute.

In US economic data, new jobless claims rose a lower-than-expected 1.186 million in the August 1 week. This is the lowest though still enormous total since the fallout of March, and it also cuts short the risk, following two prior weeks of increases, that claims were on the rise.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 2 cents to US$45.20, while spot gold rose US$20.33 to US$2,063.16. The US dollar declined slightly against most major currencies. The US Treasury 30-year bond yield fell 2 basis points to 1.20 percent while the 10-year note yield declined 1 basis point to 0.54 percent.


Worries about prospects for a US stimulus package and weak UK stocks weighed on equities Thursday. The Europe-wide STOXX 600 declined 0.7 percent, the German DAX eased 0.5 percent, the French CAC was off 1.0 percent, and the UK FTSE-100 slipped 1.3 percent.

UK stocks underperformed after the Bank of England held rates steady, and UK exporters were hurt by a subsequent uptick in sterling. Glencore, the UK miner, dropped 8 percent after scrapping its dividend. Among UK exporters, Diageo fell 1.7 percent and AstraZeneca declined 1.0 percent. Oil majors Total, down 2.4 percent, and BP, down 3.7 percent, gave back some of Wednesday's gains. Pirelli, the Italian tire maker, fell 4.8 percent on an earnings miss and weaker guidance.

Among winners, ING, the Dutch bank, rose 5.6 percent after announcing an uptick in customer activity, and saying loan impairments have peaked. Aviva, the UK insurer, rose 4.6 percent after topping earnings expectations.

In economic news, German manufacturers' orders continued to climb very sharply in June. Following a 10.4 percent monthly bounce in May, orders jumped a surprisingly sharp 27.9 percent. Annual growth improved from minus 29.4 percent to minus 10.2 percent.

Asia Pacific

Major Asian markets posted mixed results Thursday, with a light regional data calendar keeping the focus on Covid-19 developments and ongoing US-China tensions. Hong Kong's Hang Seng index underperformed with a fall of 0.7 percent on the day, while Australia's All Ordinaries index rose 0.7 percent, led by solid gains in mining and energy shares. Moves elsewhere were more subdued, with the Shanghai Composite index advancing 0.3 percent and Japan's Nikkei and Topix indices closing down 0.4 percent and 0.3 percent respectively.

The Reserve Bank of India's Monetary Policy Committee left its policy rate unchanged at 4.00 percent at its policy review held Thursday, contrary to the consensus forecast for a cut of 25 basis points to 3.75 percent. At their previous meeting, held late May, officials cut policy rates by 40 basis points. Although officials affirmed that supporting economic recovery from the pandemic remains their priority and that there is scope to ease policy further, they also argued that uncertainty about the inflation outlook warranted a prudent approach at this point. Headline CPI inflation rose to 6.1 percent in June, above the RBI's target range of 2.0 percent to 6.0 percent, and officials noted factors, particularly relating to food and fuel prices, that could push inflation higher in coming months.

Looking ahead*

On Friday in Asia/Pacific, the Reserve Bank of Australia's statement on policy is due, plus Japanese household spending figures. In Europe, German industrial production, German merchandise trade, French industrial production, French merchandise trade, UK Halifax house price index, and Italian merchandise trade reports are on tap. In North America, Canadian labour force survey, Canadian Ivey PMI, US employment situation, US wholesale trade, and US consumer credit reports are scheduled.

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