Daily market review

United States

Weak US consumer confidence figures undercut the economic recovery trade Tuesday, despite upbeat home sales data as cyclical stocks retreated while mega-cap growth stocks perked up. The Dow Jones industrial index eased 0.2 percent, the S&P 500 rose 0.3 percent, and the NASDAQ gained 0.8 percent.

Mega-caps Amazon, up 1.2 percent, Microsoft, up 1.3 percent, Facebook, up 3.5 percent, and Google, up 1.3 percent, were among the winners, along with health care.

Energy led the way down, with ExxonMobil down 3.2 percent after news it will exit the Dow Jones industrials. Other energy decliners included petroleum drillers Schlumberger, off 1.5 percent, and Helmerich & Payne, down 3.4 percent.

Airlines pulled back from Monday's gains: Delta, down 1.0 percent, and American, down 2.2 percent, unveiled plans for layoffs. United fell 3.0 percent.

Among companies in the news, Salesforce.com rose 3.7 percent, Amgen, the biotech, rose 5.4 percent, and Honeywell, the industrial conglomerate, gained 3.2 percent after news all three would join the Dow industrial average. JM Smucker rose 6.9 percent after topping earnings expectations, Gap jumped 10 percent, and Starbucks rose 5.1 percent on analyst upgrades.

In US economic data, the Conference Board's consumer confidence index fell nearly 9 points to an 84.8 level that fell short of Econoday's consensus range and below April's virus low of 85.7. Meanwhile, new home sales continued to rally in July, to an annual rate of 901,000 which far exceeded Econoday's consensus range and also far exceeds the 700,000 trend going into the crisis.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 91 cents to US$45.92, while spot gold rose US$3.44 to US$1,928.60. The US dollar fell against most major currencies. The US Treasury 30-year bond yield rose 3 basis points to 1.39 percent while the 10-year note yield rose 3 basis point to 0.69 percent.


Weakness in mining and energy stocks depressed European equities Tuesday with UK exporters off the most as sterling rose. The Europe-wide STOXX 600 declined 0.3 percent, the German DAX and French CAC were unchanged, and the UK FTSE-100 fell 1.1 percent.

Also weighing on risk sentiment were reports of rising Covid-19 cases in Europe. On the positive side were reports suggesting a more cooperative mood in US-China trade talks, as the two sides prepared to implement phase one of their trade deal.

Among sectors, technology, travel & leisure, and retail stocks held up best while construction & materials joined miners and energy in selling off. Rio Tinto, the miner, fell 2.3 percent and Royal Dutch Shell, the oil supermajor, was off 2.7 percent.

In economic data, German GDP data for the second quarter showed the economy contracted 9.7 percent on the quarter, slightly less than the flash estimate of a fall of 10.1 percent but confirming a sharp deterioration from the decline of 2.0 percent recorded in the first quarter. Separately, Ifo reported German business sentiment improved for the fourth consecutive month in August as both current conditions and expectations rose.

Asia Pacific

Major Asian markets posed mixed results Tuesday, with a bare regional data calendar keeping the focus on potential Covid-19 treatment breakthroughs and US-China trade negotiations. Shares of major airlines rallied across the region on reports Monday that US authorities might approve for emergency use a vaccine currently in development, while a phone call between senior US and Chinese officials raised hopes that progress may soon be made on the implementation of phase one of the trade deal.

Japan's Nikkei and Topix indices were among the stronger performers in the region Tuesday, up 1.3 percent and 1.1 percent respectively, while Australia's All Ordinaries index closed up 0.5 percent. The Shanghai Composite index and Hong Kong's Hang Seng index both fell Tuesday after advancing Monday, closing down 0.4 percent and 0.3 percent respectively.

Looking ahead*

On Wednesday in Asia/Pacific, New Zealand merchandise trade, Hong Kong merchandise trade, and Singapore industrial production figures are due. In North America, US durable goods and the EIA Petroleum Status reports are on tap.

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