Daily market review

United States

Equities edged up Thursday with more sectors joining the gains as mega-caps faded, after Fed Chair Jay Powell signaled the Fed would retain its accommodative stance and would allow the economy to run hotter to meet its inflation target. Weakness in mega-caps restrained the major market indexes. The Dow Jones industrial index rose 0.6 percent, the S&P 500 rose 0.2 percent, while the NASDAQ eased 0.3 percent.

Financials outperformed as interest rates surged on the Fed statement. Among other sectors, real estate and health care also outperformed. Communication services, consumer discretionary, and energy lagged the market.

Mega-cap stocks, including Apple, down 1.1 percent, Amazon, off 1.2 percent, Facebook, off 3.5 percent, and Google, down 1.1 percent, struggled with perceptions they are due for correction after recent gains.

Among companies in focus, Abbott Labs, the medical diagnostics company, rallied 7.9 percent after the FDA approved use of its 15-minute Covid-19 test. Retailer Abercrombie & Fitch rose 8 percent on a positive earnings surprise. Walmart rose 4.5 percent after signaling an interest in acquiring social media platform TikTok, while Microsoft rose 2.5 percent after a report it would buy TikTok.

In US economic data, jobless claims declined 98,000 but remained above 1 million at 1.006 million and above expectations. For GDP, the second estimate for second-quarter, at annual contraction of 31.7 percent, showed a marginally less enormous rate of contraction than the first estimate, which was 32.9 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 55 cents to US$45.09, while spot gold fell US$23.47 to US$1,930.52. The US dollar rose slightly against most major currencies. The US Treasury 30-year bond yield rose 8 basis points to 1.50 percent while the 10-year note yield rose 5 basis points to 0.75 percent.


Equities were mixed to weaker Thursday with miners selling off and travel & leisure rising sharply. The Europe-wide STOXX 600 declined 0.6 percent, the German DAX slipped 0.7 percent, the French CAC fell 0.6 percent, and the UK FTSE-100 was off 0.8 percent.

Among sectors, travel & leisure perked up on a report that UK and US officials are discussing an exemption to allow travelers to sidestep quarantine requirements. IAG, the owner of British Airways, rose 5 percent on the news. Media and food & beverage shares also outperformed.

Lagging were miners, with Rio Tinto off 1.8 percent, and Glencore down 1.1 percent. Other sectors suffering included real estate, utilities, and health care.

Among companies in the news, Rolls-Royce dropped 1 percent after negative surprise on first-half results including impairment charges and new cost cuts. Delivery Hero, the German online food delivery service, dropped 4.5 percent on disappointing first half results. On the plus side, Bouygues, the French industrial group, rose 2 percent after reporting strength in its telecom unit. WPP, the UK media business, rose 6.5 percent after resuming its dividend.

Asia Pacific

Major Asian markets posted mixed but generally modest moves Thursday, with regional investors paying attention to a range of factors, including Covid-19 vaccine news, positive Chinese industrial profits data, anticipation of Fed Chair Powell's comments, and the potential impact on oil prices of Hurricane Laura's strike on the US Gulf Coast.

The Shanghai Composite index and Australia's All Ordinaries index closed higher with gains of 0.6 percent and 0.3 percent respectively, Japan's Nikkei and Topix indices dropped 0.4 percent and 0.5 percent respectively, and Hong Kong's Hang Seng index closed down 0.8 percent. Trading in New Zealand, where the S&P/NZX 50 rose 0.2 percent, was disrupted for the third consecutive session following a cyber-attack on the domestic exchange earlier in the week.

Chinese industrial profits rose 19.6 percent in year-on-year terms in July, picking from an increase of 11.5 percent in June, with year-to-date growth also improving from a drop of 12.8 percent previously to a fall of 8.1 percent. This is broadly in line with other data suggesting that the Chinese manufacturing sector is continuing to recover from the initial impact of the pandemic, with both the PMI manufacturing survey and official industrial production data showing the sector expanded in July.

Australia's survey of private capital expenditures published Thursday showed second-quarter spending fell 5.9 percent after falling 2.1 percent in the first quarter. This is the sixth consecutive quarterly decline in private capex but the biggest since early 2016, with virus impact likely the main factor driving this further deterioration in investment spending.

Looking ahead*

On Friday in Europe, German Gfk consumer climate, French consumer manufactured goods sales, French CPI, French GDP, Swiss KOF leading indicator, Italian business and consumer confidence, Eurozone EC economic sentiment, and Italian PPI reports are scheduled. In North America, Canadian quarterly GDP, Canadian monthly GDP, US international goods trade, US personal income and outlays, US wholesale and retail inventories, US Chicago PMI, and US consumer sentiment reports are on tap.

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