Daily market review

United States

Equities mostly edged lower Thursday with mega-caps and technology stocks holding up better than cyclicals. The Dow Jones industrial index eased 0.3 percent, the S&P 500 declined 0.2 percent, and the NASDAQ rose 0.3 percent.

With US fiscal stimulus talks at an impasse, cyclicals and value stocks including energy, financials, and industrials fared worst. ExxonMobil fell 2.5 percent to depress the Dow as oil prices slipped. Consumer staples also suffered, with health and personal care and tobacco shares lagging.

Mega-caps including Apple, up 1.8 percent, held up best, along with communications services, as Netflix rose 1.2 percent to continue Wednesday's rally. Tesla continued its uptrend, up 4.3 percent on the day.

Among companies in focus, Cisco dropped 11 percent after guiding lower for the third quarter. Lyft fell 5.4 percent on the virus hit to its ride-sharing business and an adverse ruling in California that Lyft and Uber must consider their drivers employees. Micron, the chipmaker, fell 4.8 percent on a downgrade at Deutsche Bank.

In economic data, initial jobless claims finally moved below 1 million in the August 8 week, falling 228,000 to 963,000. This is the lowest reading since the crisis began in March, but claims remain elevated and the labor market in distress.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 24 cents to US$45.08, while spot gold rose US$34.98 to US$1,951.80. The US dollar fell against most major currencies. The US Treasury 30-year bond yield rose 5 basis points to 1.42 percent while the 10-year note yield rose 3 basis points to 0.72 percent.


Equities eased on mixed corporate news and virus worries Thursday with export-led UK markets hit by sterling's rise. The Europe-wide STOXX 600 declined 0.6 percent, the German DAX eased 0.5 percent, the French CAC fell 0.6 percent, and the UK FTSE-100 dropped 1.5 percent.

Virus outbreaks in Spain, Germany, France, and the UK renewed fears about the recovery and hurt cyclicals, including automakers, banks, miners, and oil stocks, while technology held up better. Several stocks suffered after going ex-dividend Thursday, including UK pharma stocks AstraZeneca, off 1.8 percent, and GlaxoSmithKline, off 2.6 percent.

The day's worst performers included TUI, the German travel company, off 7.0 percent on the ongoing impact of the virus on the tourism business. Thyssenkrupp, the German industrial conglomerate, dropped 17 percent after saying its steel business would make huge losses this year. Carlsberg, the Danish brewer, fell 6.3 percent after warning of weak sales ahead in Europe and Asia. Airbus fell 1.7 percent after the US left its 15 percent tariffs in place on the company's products.

Asia Pacific

Major Asian markets again posted mixed results Thursday, with no dominant factor driving sentiment across the region. Australia's All Ordinaries index underperformed, closing down 0.5 percent on the day after labour market data showed an increase in the unemployment rate, while Hong Kong's Hang Seng index and the Shanghai Composite index closed down 0.1 percent and flat respectively. Japan's Nikkei and Topix indices, however, posted solid gains of 1.8 percent and 1.2 percent respectively, with shares of major automakers and tech companies among those to perform well.

Australia's labour market remained weak but showed some signs of improvement as business and social restrictions were eased further in July in parts of the country. Employment rose for the second consecutive month, up 114,700 following an increase of 218,800 in June, with full-time employment rising for the first time since February. The number of unemployed persons rose to a record level above 1,000,000, with the unemployment rate increasing from 7.4 percent to 7.5 percent, though this was largely driven by an increase in the participation rate from 65.0 percent to 64.7 percent. With restrictions reimposed in recent weeks in Victoria, Australia's second most populous state and location of almost 25 percent of national economic activity, recovery to pre-pandemic will likely be a slow process.

Japan's producer price index fell 0.9 percent on the year in July after dropping 1.6 percent in June. This is the fifth consecutive year-on-year decline in producer prices. The index rose 0.6 percent on the month, as it did previously. The smaller year-on-year decline in headline producer prices in July was mainly driven by a less pronounced – though still large – fall in energy prices. Prices for other major categories, including food and transportation equipment, rose at a steady pace in July.

India's consumer price index rose 6.93 percent on the year in July, picking up from 6.23 percent in June and further above the top of the Reserve Bank of India's target range of 2.0 percent to 6.0 percent. The RBI left policy rates on hold at its most recent policy meeting last week, with officials noting factors, particularly relating to food and fuel prices, that could push inflation higher in coming months.

Looking ahead*

On Friday in Asia/Pacific, Chinese house price index, Chinese fixed asset investment, Chinese retail sales, and Chinese industrial production, Indian merchandise trade, Indian wholesale prices, Hong Kong GDP, and Japanese tertiary index reports are due. In Europe, Swiss producer and import prices, French CPI, Eurozone GDP flash, and Eurozone merchandise trade reports are on tap. In North America, Canadian manufacturing sales, US retail sales, US productivity and costs, US industrial production, US business inventories, and US consumer sentiment reports are scheduled.

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