Daily market review

United States

Weakness in tech shares dragged equities down into the close Thursday, and value stocks sagged as well on recovery worries. The Dow Jones industrial index declined 1.5 percent, the S&P 500 fell 1.8 percent, and the NASDAQ dropped 2.0 percent.

Apple, down 3.3 percent, and Amazon, off 2.9 percent, gave up sharp early gains on selling in growth and momentum stocks. Tesla ended up 1.4 percent after a rollercoaster day.

Cyclical shares suffered too after US fiscal stimulus hopes hit a dead end after the Senate rejected the Republican stimulus bill. A disappointing US jobless claims report was another negative. Energy shares were off on falling crude oil prices after an unexpected rise in US inventories reported Wednesday.

Among companies in focus, Restoration Hardware rallied 21 percent on an earnings and revenues beat, and upward guidance. Bed Bath & Beyond rose 4.9 percent after an upgrade at Wedbush Securities. Spotify, the streaming audio service, rose 1.0 percent on an upgrade at Credit Suisse.

On the downside, Gamestop, the video game retailer, fell 15 percent after an earnings miss. Nikola, the electric truck-maker, fell 11 percent on an analyst downgrade. BigCommerce, the information technology services company, fell 9.1 percent on cautious analyst commentary about its high valuation.

In economic data, US jobless claims were unchanged at 884,000 in the September 5 week, at the high end of Econoday's range of forecasts and suggesting a slowing in the labor market's recovery.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 88 cents to US$39.89 while spot gold fell US$5.58 to US$1942.98. The US dollar rose against most major currencies. The US Treasury 30-year bond yield fell 3 basis points to 1.42 percent while the 10-year note yield fell 2 basis points to 0.68 percent.


European equities edged down Thursday amid mild disappointment the European Central Bank was not more dovish in its policy announcement. The Europe-wide STOXX 600 declined 0.6 percent, the German DAX eased 0.2 percent, the French CAC slipped 0.4 percent, and the UK FTSE-100 declined 0.2 percent.

Worries about Brexit were in focus as the EU and UK remained at odds over the terms of the UK departure.

Among sectors, worst hit were basic resources, construction & materials, financial services, insurance, health care, telecom, and utilities. Outperformers included travel & leisure, autos & parts, and personal & household goods.

Among companies in focus, French luxury conglomerate LVMH rose 0.1 percent after saying it will sue Tiffany related to the collapse of its proposed acquisition of the US firm. Games Workshop, the UK video game company, rose 10 percent on a positive earnings surprise.

On the downside, Morrisons, the UK supermarket, fell 6.1 percent on pandemic-related earnings weakness. Petrofac, the UK oilfield services company, also fell 7.4 percent on an earnings miss.

Asia Pacific

Major Asian markets posted mixed results Thursday, with gains on Wall Street Wednesday providing some support but other factors affecting sentiment. Japan's Nikkei and Topix indices outperformed with gains of 0.9 percent and 1.2 percent respectively after better-than-expected machinery orders data, while Australia's All Ordinaries index closed up 0.5 percent.

The Shanghai Composite index and Hong Kong's Hang Seng index, however, both fell 0.6 percent on the day, with the latter impacted by a sharp drop in shares of food retailer Yum China following its secondary listing on the Hong Kong exchange. Indonesia's Jakarta Composite index fell 5.0 percent on the day after authorities announced a re-tightening of restrictions in Jakarta in response to a spike in Covid-19 cases.

Japan's private sector machinery orders (excluding volatile items) rose 6.3 percent on the month in July after dropping 7.6 percent in June, stronger than the consensus forecast for an increase of 2.0 percent, and fell 16.2 percent on the year after dropping 22.5 percent previously. Both manufacturing and non-manufacturing orders rose on the month. Despite the month-on-month increase in July, officials still expect orders to decline 1.9 percent on the quarter in the three months to September after they fell 12.9 percent in the three months to June.

Looking ahead*

On Friday in Asia/Pacific, the Japanese PPI, Chinese new yuan loan, and Indian industrial production reports are due. In Europe, reports German CPI, UK industrial production, UK merchandise trade, UK monthly GDP, and Italian unemployment reports are scheduled. In North America, US CPI and US Treasury statement reports are on tap.

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