Daily market review

United States

Equities were mixed Friday with the FAANGs and growth stocks lagging cyclicals. The Dow Jones industrial index rose 0.5 percent, the S&P 500 firmed 0.1 percent, and the NASDAQ slipped 0.6 percent.

Value sectors including financials, industrials, and materials outperformed while mega-cap growth stocks weakened, with technology, communications services, and consumer staples off. Among mega-caps, Apple was down 1.3 percent, Amazon was off 1.9 percent, Alphabet was down 0.7 percent, and Facebook fell 0.6 percent. The market continued to wrestle with valuation worries, and some analysts said heightened volatility for these mega-caps is signaling a volatile autumn.

Among companies in focus, chemicals maker LyonDellBasell rose 4.8 percent on an analyst upgrade.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 4 cents to US$39.93, while spot gold fell 68 cents to US$1942.30. The US dollar was weaker against most major currencies though it rose vs. sterling. The US Treasury 30-year bond yield was down 1 basis point to 1.42 percent while the 10-year note yield eased 1 basis point to 0.67 percent.


M&A activity helped European equity indexes edge up Friday though most sectors slipped amid ongoing Brexit concerns. The Europe-wide STOXX 600 and the German DAX percent both fell 0.1 percent, the French CAC rose 0.2 percent, and the UK FTSE-100 rose 0.5 percent.

In M&A, Altice Europe surged 25 percent on news it will be acquired by its founder. Some saw the deal as a sign of more such takeovers to come. Meanwhile, markets reacted badly to uncertainty over Brexit and the UK government's plan to renege on some of its Brexit treaty requirements. UK Prime Minister Boris Johnson appeared to harden his position by setting a Oct. 15 deadline for reaching a Brexit deal.

UK stocks received a boost from the announcement of a UK-Japan trade agreement.
Among sectors, banks, travel & leisure, oil & gas, industrials, and real estate lagged while basic resources, personal & household goods, and health care held up best.

Among companies in focus, Rio Tinto rose 4.4 percent after announcing the departure of its CEO. French luxury giant LVMH rose 3.0 percent after announcing it would sue Tiffany after the collapse of its planned acquisition of the US luxury icon.

On the downside, German auto parts maker Knorr-Bremse declined 3.5 percent after a large investor announced a big sale of stock.

Asia Pacific

Most major Asian markets closed higher Friday, though moves on the week diverged widely. The regional data calendar was light Friday, keeping investors' focus on developments elsewhere, including US tech sector performance, the US fiscal stimulus bill, and Brexit negotiations. Japan's Nikkei and Topix indices both closed up 0.7 percent Friday and were among the stronger regional performers on the week with gains of 0.9 percent and 1.2 percent respectively. Hong Kong's Hang Seng index and the Shanghai Composite index also closed higher Friday, both up 0.8 percent, but dropped 0.7 percent and 2.8 percent respectively on the week. Australia's All Ordinaries index fell 0.8 percent on the day and 1.1 percent on the week, with mining shares among the weaker performers on Friday.

Japan's producer price index fell 0.5 percent on the year in August after dropping 0.9 percent in July. This is the sixth consecutive year-on-year decline in producer prices but the smallest since March. The index rose 0.2 percent on the month after advancing 0.6 percent previously. The smaller year-on-year decline in headline producer prices in August was mainly driven by a less pronounced - though still large - fall in energy prices, with price changes steady for other major categories.

Total new yuan loans made by Chinese banks in August amounted to CNY1,280.7 billion, up from CNY992.7 billion in July. Total outstanding loans rose by 13.0 percent on the year in August, unchanged from the growth recorded in July.

India's index of industrial production fell 10.4 percent on the year in July after dropping 16.6 percent in June, suggesting that conditions remain weak but to a lesser extent than in the initial few months of the national lockdown put in place late March to curb the spread of Covid-19 . Manufacturing output fell 11.1 percent on the year after a decline of 17.1 percent previously. Recent PMI survey data also indicate that the contraction in the manufacturing sector has moderated in recent months but remains substantial.

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