Daily market review

United States

Another selloff in FAANGs and mega-cap momentum stocks kept equities under pressure Friday. The Dow Jones industrial index declined 0.9 percent, the S&P 500 fell 1.1 percent, and the NASDAQ declined 1.1 percent.

Tech stocks suffered from news that the US will block downloads of Chinese social media firms' TikTok and WeChat apps, which raised worries about Chinese retaliation against US firms. Chipmakers, a high-beta sector, were hit hard, with Advanced Micro Devices down 2.1 percent, and Nvidia down 2.2 percent. Tech bellwether Apple fell 3.2 percent and Microsoft was off 1.2 percent.

Cyclicals including industrials and financials outperformed as money appears to be rotating out of growth sectors into value stocks. Health care also outperformed, with pharma leading. On the downside, real estate and consumer discretionary trailed the market, with Amazon off 1.8 percent.

In US economic data, the consumer sentiment index rose nearly 6 points in the preliminary September reading to 78.9. This compares with April's virus low of 71.8 but is far short of 101.0 back in February.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 24 cents to US$43.06, while spot gold rose US$2.62 to US$1950.91. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield rose 1 basis point to 1.45 percent while the 10-year note yield was unchanged at 0.69 percent.


Stocks pegged to the reopening trade slipped Friday on rebounding coronavirus cases across Europe. The Europe-wide STOXX 600 and the German DAX percent both declined 0.7 percent, the French CAC fell 1.2 percent, and the UK FTSE-100 was off 0.7 percent.

France and the UK showed an uptick in virus cases this week, following France and Spain. Reports suggested the UK was considering re-imposing broader lockdowns. On the positive side, Brexit news appeared more supportive as EU officials reportedly said a deal was still possible.

Cyclicals including autos, banking, and especially travel stocks were hit, with UK cruise ship operator Carnival off 7.9 percent and UK airline EasyJet off 9.1 percent. Among automakers, Volkswagen shares lost 3.4 percent and Peugeot declined 4.4 percent.

Asia Pacific

Most Asian markets closed higher on the day Friday, with moves on the week generally moderate. The regional data calendar was light Friday, with the outlook for the global tech sector still a major focus for regional investors. The Shanghai Composite index posted the largest gains on both the day and on the week, advancing 2.1 percent and 2.4 percent respectively after solid currency gains in recent sessions. Japan's Nikkei and Topix indices rose 0.2 percent and 0.5 percent respectively on the day and posted a fall of 0.2 percent and an increase of 0.6 percent respectively on the week. Australia's All Ordinaries index was little changed on both the day and the week, down 0.2 percent and up 0.3 percent respectively, as was Hong Kong's Hang Seng index, up 0.4 percent and down 0.3 percent respectively.

Japanese inflation data released Friday showed price pressures remained subdued in August. The headline consumer price index advanced 0.2 percent on the year in August, down slightly from an increase of 0.3 percent in July, with food price inflation picking up but price changes in other major categories relatively steady. Core CPI, which excludes fresh food prices, fell 0.4 percent in August after no change in July, matching the consensus forecast, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, fell 0.1 percent on the year after increasing 0.4 percent previously. These declines in core measures of inflation were largely driven by weaker price changes for furniture and household utensils, culture and recreation, and medical care. At their policy meeting held earlier in the week, BoJ officials noted that inflation is expected to remain weak in the near-term and increase only gradually. Officials also reaffirmed their commitment to keep policy rates at or below current levels until they are confident that inflation will be sustainably above their 2.0 percent target level.

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