Daily market review

United States

Mega-cap momentum stocks led US stock indexes higher Wednesday while value stocks and much of the rest of the market flagged. The Dow Jones industrial index rose 0.3 percent, the S&P 500 rose 1.0 percent, and the NASDAQ advanced 1.7 percent.

Apple, up 1.4 percent, Microsoft, up 2.2 percent, Facebook, up 8.2 percent, Netflix, up 12 percent, Amazon, up 2.9 percent, and Tesla, up 6.4 percent, continued their remarkable run, in contrast with many Dow stocks and many S&P sectors which actually declined, especially financials, energy, and health care.

Among companies in focus, Salesforce.com surged 26 percent on an earnings beat and favorable analyst commentary. Intuit, the maker of TurboTax, rose 1.8 percent on a big upside earnings surprise driven by the delayed US tax-filing deadline. Hewlett Packard Enterprise rose 3.6 percent on an earnings and revenues beat.

On the downside, Nordstrom, the retailer, fell 5.5 percent on weaker-than-expected sales due to store closures and resurgent Covid-19 cases in July. Autodesk, the software maker, fell 1.6 percent on disappointing guidance. Among energy companies, Phillips 66 was off 2.6 percent and Chevron was down 1.6 percent as they shut Gulf Coast operations due to Hurricane Laura.

In US economic data, motor vehicles helped durable goods orders jump 11.2 percent in July to exceed Econoday's consensus range. Orders excluding transportation equipment rose 2.4 percent, and core capital goods orders were up 1.9 percent, also better than expected.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 28 cents to US$45.64, while spot gold rose US$24.49 to US$1,953.09. The US dollar fell against most major currencies. The US Treasury 30-year bond yield rose 2 basis points to 1.41 percent while the 10-year note yield rose 1 basis point to 0.70 percent.


New stimulus measures expected from France and Germany gave equities a lift Wednesday. The Europe-wide STOXX 600 rose 0.9 percent, the German DAX gained 1.0 percent, the French CAC rose 0.8 percent, and the UK FTSE-100 firmed 0.1 percent.

Germany's governing parties agreed to extend the country's payments to businesses and workers to support the economy, while France is expected to unveil its stimulus package next week. Separately, Italy's health minister ruled out renewed lockdowns despite rising case numbers.

Among sectors, technology, miners, and real estate fared best while lagging were energy, telecom, and utilities. Among companies in focus, German software giant SAP rose 1.7 percent after its US rival, Salesforce.com, raised its sales guidance. ASR Nederland, the insurance group, rose 4 percent after topping earnings expectations. Emmi, the Swiss dairy products firm, rose 6 percent on upbeat full-year guidance.

On the downside, Danish medical equipment maker Ambu fell 13 percent after an earnings and revenues miss. Mowi, the Norwegian seafood company, lost 6.4 percent on business disruptions related to Covid-19. Scandic, the Swedish hotel chain, fell 2.5 percent as travel companies suffered from the virus hit to travel.

Asia Pacific

Most major Asian markets closed flat or moderately lower Wednesday, with the regional data calendar doing little to shift investor sentiment and few major developments on key issues. The Shanghai Composite index underperformed, dropping 1.3 percent on the day with local investors taking profits after strong gains earlier in the week tied to changes in daily trading limits on the tech-focused ChiNext exchange. Australia's All Ordinaries index also fell, down 0.6 percent on the day. Japan's Nikkei and Topix indices were both flat on the day as was Hong Kong's Hang Seng while New Zealand's S&P/NZX 50 rose 0.3 percent.

New Zealand's merchandise trade surplus narrowed from NZ$475 million in June to NZ$282 million in July. Exports and imports were both well below pre-pandemic levels. Exports of goods fell 0.2 percent on the year in July, down from 2.5 percent in June, mainly reflecting weaker exports of dairy products and weaker demand from China, while imports of goods fell 18.1 percent after a decline of 0.5 percent.

Hong Kong's merchandise trade deficit narrowed from HK$33.3 billion in June to HK$29.8 billion in July. Exports fell 3.0 percent on the year after a decline of 1.3 percent previously, while imports fell 3.4 percent after dropping 7.1 percent. Singapore industrial production data for July indicated ongoing weakness in the domestic manufacturing sector, broadly in line with other data. Output fell 8.4 percent on the year in July after falling 6.5 percent in June.

Looking ahead*

On Thursday in Asia/Pacific, Australian capital expenditures, Chinese industrial profits, and the Japanese all-industry index are due. In Europe, scheduled are Swiss GDP, French business climate indicator, and Eurozone M3 money supply reports. In North America, the main event is Fed Chair Jay Powell's speaking appearance, plus revised US GDP, jobless claims, pending home sales, and the Kansas City Fed manufacturing report.

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