Daily market review

United States

Equities bounced back Wednesday as buyers found prices hard to resist after days of steep declines, with tech stocks and sectors tied to the stay-at-home trade outperforming. The Dow Jones industrial index rose 1.6 percent, the S&P 500 gained 2.0 percent, and the NASDAQ advanced 2.7 percent.

Gains were across the board but leading were mega-caps and tech stocks beaten up in a three-day shellacking. Apple, the tech bellwether, led the tech winners, up 4.0 percent, along with Microsoft, up 4.3 percent. Amazon rebounded by 3.8 percent to boost consumer discretionary. Tesla, the momentum champion, rebounded by 11 percent after plunging 21 percent on Tuesday.

Worries about delays in Covid-19 vaccines kept secular growth stocks in favor while cyclicals most sensitive to re-opening worries lagged. Financials were a big drag, along with energy, though both advanced.

Among companies in focus, Peloton, the home exercise company, rose 6.5 percent after BankAmerica raised its price target. News that AstraZeneca had paused its vaccine trials shook up markets briefly, but the company and others working on vaccines bounced back on a report the trial would resume soon. Other biotechs, including Moderna, up 4.7 percent, and BioNTech, up 4.2 percent, rebounded after assuring the market their vaccine trials were on track.

On the downside, Tiffany fell 6.5 percent after its acquisition by French luxury conglomerate LVMH collapsed. United Airlines fell 3.4 percent after lowering its guidance. Navistar, the truck and engine maker, declined 2.5 percent on a revenues miss and gloomy outlook.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 83 cents to US$40.77, while spot gold rose US$17.28 to US$1,948.46. The US dollar declined against major currencies. The US Treasury 30-year bond yield rose 3 basis points to 1.45 percent while the 10-year note yield rose 2 basis points to 0.70 percent.


Equities bounced back tracking Wednesday's rebound on Wall Street, as tech stocks in particular saw buying after three days of heavy selling. The Europe-wide STOXX 600 rose 1.6 percent, the German DAX jumped 2.1 percent, the French CAC gained 1.4 percent as did the UK FTSE-100.

Markets were eyeing the European Central Bank policy announcement due Thursday, and though expectations are for the ECB to stay on hold, many expect dovish signals, including a looser adjustment in inflation targeting along the lines of the Federal Reserve's recent policy shift.

Leading the way higher were telecom, insurance, technology, personal & household goods, oil & gas, and financial services. Lagging the up-move were travel & leisure, retail, autos & parts, media, and construction & materials. Airlines were notable decliners, with EasyJet off 2.1 percent after the UK budget airline announced service cuts.

Among companies in focus, AstraZeneca recovered to end up 0.5 percent in London on a report it would resume its Covid-19 vaccine trials after a suspension.

Asia Pacific

Major Asian markets closed lower Wednesday, with regional investors taking guidance from sharp declines in Wall Street on Tuesday. The tech sector underperformed while reports of problems with potential Covid-19 treatments also weighed on sentiment.

Australia's All Ordinaries index closed down 2.1 percent on the day after solid gains earlier in there week, while the Shanghai Composite index and Hong Kong's Hang Seng index dropped 1.9 percent and 0.6 percent respectively. Japan's Nikkei and Topix indices both fell 1.0 percent on the day, with shares of financial conglomerate Softbank continuing to drop amid reports the company has substantially increased its exposure to equity derivatives in the tech sector.

Chinese inflation data published Wednesday were in line with expectations. The headline consumer price index increased 2.4 percent on the year in August, down from 2.7 percent in July with food prices moderating. China's producer price index fell 2.0 percent on the year in data also for August after dropping 2.4 percent in July.

Looking ahead*

On Thursday in Asia/Pacific, the Japanese machinery orders report is due. In Europe, reports on French industrial production, Italian industrial production, and the ECB policy announcement are scheduled. In North America, US PPI-FD, US jobless claims, and US wholesale inventories reports are on tap.

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