Daily market review

United States

Strength in mega-caps offset weakness elsewhere Thursday as cyclicals drifted down. The Dow Jones industrial index rose 0.2 percent, the S&P 500 gained 0.3 percent, and the NASDAQ jumped 1.1 percent.

Underwhelming US economic data, including higher-than-expected jobless claims and a miss on the Philadelphia Fed manufacturing report, dampened sentiment especially for cyclicals. The market also continued to react unfavorably to Wednesday's FOMC minutes, which showed policy-makers see the risk of a delayed recovery but are not ready to step up policy measures.

Gains in Apple, up 2.2 percent, Microsoft, up 2.3 percent, Amazon, up 1.1 percent, and Tesla, up 6.6 percent, helped the NASDAQ outperform. Nvidia, the gaming chipmaker, was flat after beating market expectations for earnings as demand for online gaming has surged during the pandemic. Intel rose 1.7 percent after announcing share buybacks.

Winning sectors included technology and communications services, given mega-cap gains, while laggards included financials, materials, industrials, and energy. The energy sector fared worst as crude oil prices fell after bearish commentary from OPEC+ countries following their videoconference meeting Wednesday. Schlumberger, the oil services leader, fell 4.8 percent, while Apache, the driller, was off 3.9 percent.

Among companies in the news, Lyft, up 5.8 percent, and Uber, up 6.8 percent, benefited after a judge delayed an order that they must pay drivers more in California.

In US economic news, initial claims in the August 15 week rose 135,000 to a 1.106 million level that is not only enormous but exceeded Econoday's consensus range. Separately, improvement is still strong but is slowing in the Mid-Atlantic manufacturing region based on the Philadelphia Fed's manufacturing index which, at 17.2 in August, missed the low end of Econoday's consensus range. But mid-to-high teens nevertheless indicate very strong growth compared to July.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 26 cents to US$44.93, while spot gold rose US$11.84 to US$1,952.53. The US dollar declined against most major currencies. The US Treasury 30-year bond yield declined 4 basis points to 1.38 percent while the 10-year note yield declined 3 basis points to 0.65 percent.


Fallout from Wednesday's release of the FOMC minutes weakened equities Thursday as markets were disappointed Fed officials were not more dovish or more hopeful about the economic outlook. The Europe-wide STOXX 600 and the German DAX both fell 1.1 percent, the French CAC lost 1.3 percent, and the UK FTSE-100 dropped 1.6 percent.

Markets also suffered from accelerating Covid-19 case numbers in Germany and the UK, and reports showing expectations are fading for a fast recovery from the second quarter's deep plunge.

Among sectors, the biggest losers were financial services, autos, banks and mining shares. Holding up better were real estate, media, and health care.

Among companies in the news, Antofagasta, the Chilean miner, dropped 5.6 percent on the London exchange after an earnings miss and gloomy copper production forecast. Premier Oil, the UK driller, fell 24 percent after reporting poor first-half results and guidance. On the positive side, Tag Immobilien, the German property company, rose 6.9 percent on surprisingly upbeat results and rental outlook. Ferratum, the Finnish mobile financial services company, surged 31 percent as its results topped market expectations.

Asia Pacific

Major Asian markets closed lower Thursday, with declines on Wall Street Wednesday and concerns about the US economic outlook expressed in FOMC minutes weighing on investor sentiment. Hong Kong's Hang Seng index and the Shanghai Composite index were among the weaker performers, down 1.5 percent and 1.3 percent respectively, while Japan's Nikkei and Topix indices fell 1.0 percent and 0.9 percent respectively. Australia's All Ordinaries index dropped 0.7 percent on the day. Korea's Kospi index fell sharply for the second consecutive day, closing down 3.7 percent as domestic Covid-19 cases continue to increase at an alarming rate.

The People's Bank of China left the one-year loan prime rate unchanged at 3.85 percent at its monthly review Thursday, with the equivalent five-year rate also unchanged at 4.65 percent. These rates have been on hold since they were reduced by 20 basis points and 10 basis points respectively in April. This suggests that officials remain comfortable for now with the degree to which monetary policy is supporting domestic activity. June data published last week showed the economy continues to recover from the initial impact of the Covid-19 pandemic.

Hong Kong's CPI fell 2.3 percent on the year in July after increasing 0.7 percent in June and fell 2.5 percent on the month after dropping 0.1 percent previously. The sharp drop was mainly driven by government measures aimed at providing support to households to offset the impact of the Covid-19 pandemic, particularly public housing subsidies and rental waivers. Excluding the impact of various government measures, Hong Kong's underlying inflation rate fell from 1.2 percent in June to 0.2 percent in July, largely reflecting weaker growth in restaurant prices and public transport fares. Officials expect price pressures to remain subdued in coming months in response to ongoing weakness in global and domestic economic conditions.

Looking ahead*

On Friday in Asia/Pacific, Japanese CPI, Japanese PMI composite flash that will include the manufacturing flash are scheduled. In Europe, UK public sector borrowing, UK retail sales, French PMI composite flash, German PMI composite flash, Eurozone PMI composite flash, UK CIPS/PMI composite flash, UK CBI industrial trends, and Eurozone EC consumer confidence reports are due. In North America, Canadian retail sales, US PMI composite flash, and US existing home sales reports are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies