Daily market review

United States

Equities advanced Wednesday, with value stocks rising in addition to the mega-cap growth stocks that have powered the market lately. The Dow Jones industrial index rose 1.6 percent, the S&P 500 gained 1.5 percent, and the NASDAQ rose 1.0 percent.

Equities were supported by positive earnings results, optimism about progress on Covid-19 vaccines, and fear of missing the rally. Comments from Federal Reserve officials underlined expectations that monetary policy will stay supportive as recovery is delayed.

Consumer staples, utilities, and financials advanced, as some investors expected a correction in growth shares and looked to spread their risk across broader parts of the market. Gains in utilities, which led the market, suggested a more defensive investment perspective. Among consumer staples, Brown-Forman, owner of Jack Daniels brands, rose 10 percent on an earnings beat. Other winners included Coca-Cola, up 3.1 percent, Clorox, up 1.8 percent, and Molson Coors, up 2.5 percent.

In US economic news, ADP estimated private payrolls will rise 428,000 in Friday's employment report for August which would be lower than expected. Econoday's consensus for ADP's estimate was for a rise of 900,000 jobs.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.34 to US$44.38, while spot gold fell US$25.45 to US$1,943.54. The US dollar rose against most major currencies. The US Treasury 30-year bond yield was down 5 basis points at 1.38 percent while the 10-year note yield declined 3 basis points to 0.65 percent.


An upbeat start on Wall Street and company news gave European equities a boost Wednesday with tech, chemicals and personal and household goods leading. The Europe-wide STOXX 600 rose 1.7 percent, the German DAX gained 2.1 percent, the French CAC rose 1.9 percent, and the UK FTSE-100 gained 1.4 percent.

Among sectors, others beating the market included health care, industrials, telecom, and media, while lagging were banks, oil & gas, basic resources, insurance, and travel & leisure.

Notable companies included Roche, the Swiss pharma, up 3.2 percent after regulators approved its fast Covid-19 antigen test. Airbus rose 3.3 percent on an agreement with Qatar Airways over deliveries. Ted Baker, the UK clothier, rose 14 percent on a management shakeup. On the downside, Norwegian Air was off 5 percent as it is seeking a new rescue package. BankInter, the Spanish bank, fell 4.6 percent on a downgrade at JP Morgan.

In economic data, the German recovery in consumer spending lost further ground in July. Following a 1.9 percent monthly decline in June, retail sales fell a further 0.9 percent, undershooting market expectations.

Asia Pacific

Major Asian markets again diverged Tuesday, though moves were generally moderate, with the data regional calendar relatively light. Australia's All Ordinaries index was the exception, rebounding 1.8 percent after it had dropped sharply Monday. The Australian dollar, meanwhile, weakened. Elsewhere in the region, Hong Kong's Hang Seng index and the Shanghai Composite index fell 0.3 percent and 0.2 percent respectively, while Japan's Nikkei and Topix indices both closed up 0.5 percent.

Australia's GDP fell 7.0 percent on the quarter in the three months to June, weakening sharply from a drop of 0.3 percent in the three months to March. This is by far the biggest quarterly decline in GDP since records began in 1959 and confirms that the Covid-19 pandemic has pushed the economy into recession for the first time in nearly 30 years. Consumer spending and investment both dropped sharply, offset by positive contributions from public demand and net exports. Officials at the Reserve Bank of Australia, after they left policy rates on hold earlier this week, argued that the downturn has been less severe than feared but that the recovery will likely be slower than they initially anticipated.

Looking ahead*

On Thursday in Asia/Pacific, Hong Kong PMI, Japanese PMI composite final, Singapore PMI, Australian goods and services trade, Chinese Caixin General Services PMI, and Indian PMI composite reports are due. In Europe, Swiss CPI, French PMI composite final, German PMI composite final, Eurozone PMI composite final, UK PMI composite final, and Eurozone retail sales reports are scheduled. In North America, Canadian merchandise trade, US Challenger job-cut, US goods and services trade, US jobless claims, US productivity and costs, US PMI composite final, and US ISM services index reports are on tap.

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